India eyes textile push in 40 nations to cushion US tariff blow

New Delhi: India is preparing dedicated outreach programmes in 40 countries, including the United Kingdom, Japan, and South Korea, to boost textile exports as part of a broader strategy to shield its economy from the impact of steep new tariffs imposed by the United States. An official said on Wednesday that these initiatives will be pursued alongside communication with Washington, which remains open to resolve the trade dispute.

Other countries being targeted under this initiative include Germany, France, Italy, Spain, the Netherlands, Poland, Canada, Mexico, Russia, Belgium, Turkiye, the United Arab Emirates, and Australia. Together, the 40 markets represent more than USD 590 billion in textile and apparel imports, while India’s share stands at only 5–6 per cent.

“In each of these 40 markets, this is proposed to pursue a targeted approach, positioning India as a reliable supplier of quality, sustainable, and innovative textile products,” the official explained. Export Promotion Councils (EPCs) and Indian missions abroad will spearhead the effort.

The United States’ new 50 per cent tariff regime on Indian exports, effective August 27, has created uncertainty for sectors heavily dependent on the American market. The duties cover a wide range of goods and are expected to affect exports worth over USD 48 billion.

The sectors most exposed include textiles and clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and machinery. Sectors such as pharmaceuticals and certain electronics remain outside the purview of the duties.

According to government data, India exported USD 86.5 billion worth of goods and services to the US in 2024–25, accounting for around 20 per cent of its total exports. The US has been India’s largest trading partner since 2021–22, with bilateral trade in goods touching USD 131.8 billion last year.

Sources in New Delhi said that while the tariff shock is significant, “communication channels are open between India and the US to resolve the ongoing issues, and this is only a temporary phase in a long-term relationship.”

The Commerce Ministry is also fast-tracking work on the Export Promotion Mission, announced in the Union Budget for 2025–26. Officials confirmed a series of consultations with exporters across chemicals, textiles, and gems and jewellery will take place this week to explore diversification into newer markets.

“In the next 2-3 days, the ministry will meet stakeholders on the diversification of exports,” one official said, noting that expansion into Africa and Latin America is also being planned.

India-Africa trade has already crossed USD 100 billion, and officials see scope for leveraging the African Continental Free Trade Area Agreement to deepen ties. Trade with Latin America crossed USD 43 billion in 2023 and is projected to reach USD 100 billion by FY28.

EPCs are expected to be central to this push. They will conduct market mapping, identify high-demand products, and connect specialised production hubs such as Surat, Panipat, Tirupur, and Bhadohi with opportunities in the targeted countries. They will also lead India’s presence at international exhibitions and fairs under a unified “Brand India” platform.

The textiles sector, which exports USD 10.3 billion to the US, is among the hardest hit. Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC), said, “The apparel industry was reconciled to the 25 per cent reciprocal tariff announced by the USA, as it was prepared to absorb a part of the tariff increase. But the additional burden of another 25 per cent tariff, taking the overall rate to 50 per cent, has effectively driven the Indian apparel industry out of the US market.”

He warned that Indian exporters now face a tariff disadvantage of 30–31 per cent compared to competitors such as Bangladesh, Vietnam, and Sri Lanka. “The industry expects urgent fiscal support from the government to sustain in the US market until a bilateral agreement restores favourable terms of trade,” Thakur added.

Leather exporters have also expressed concern. Agra-based exporter Puran Dawar said, “The industry will take a big near-term hit unless other overseas markets—particularly England, France, and Germany—step up purchases.” Some firms, he said, already face pressure from American buyers to offer discounts of up to 20 per cent to retain orders.

Shrimp farmers, primarily in Andhra Pradesh, face tariffs as high as 60 per cent on shipments to the US. India exported shrimps worth USD 2.4 billion to America in FY25, accounting for nearly one-third of its total shrimp exports. Producers are now looking to expand to China, Japan, and European Union markets to cushion the blow.

Jewellery manufacturers are also under strain. With the US market alone accounting for USD 12 billion in gems and jewellery exports, stakeholders fear a shift in orders to competitors such as Thailand and Turkiye.

The Federation of Indian Export Organisations (FIEO) has called for urgent steps, including a one-year moratorium on loan repayments, expansion of production-linked incentive (PLI) schemes, and accelerated trade negotiations with the European Union, the Gulf Cooperation Council, and Latin American countries.

FIEO also urged investment in cold-chain and storage infrastructure to strengthen competitiveness. “Swift, coordinated action among exporters, industry bodies, and government agencies is required to protect livelihoods and reinforce trade links,” the body said.

The Global Trade Research Initiative (GTRI) warned that the tariffs will hit 66 per cent of India’s USD 86.5 billion exports to the US. Founder Ajay Srivastava said, “The new tariff regime marks one of the most severe trade shocks India has faced in recent years. With over two-thirds of exports to the US now subject to prohibitive duties, critical labour-intensive sectors face sharp declines in competitiveness and employment.”

GTRI projected India’s exports to the US could fall steeply to USD 49.6 billion in FY26.

Despite the tariff shock, officials from both nations are signalling the possibility of eventual resolution. A source familiar with discussions said, “There is no need for panic as the diversified nature of Indian exports means the impact will not be as severe as feared.”

Data from the Commerce Ministry shows exports to the US grew 21.6 per cent to USD 33.5 billion during the first four months of this fiscal year, raising hopes that trade volumes may still touch last year’s figure.

Meanwhile, in an interview with Fox Business, US Treasury Secretary Scott Bessent said the India-US relationship was “very complicated” but expressed optimism. “At the end of the day, we will come together,” he said, adding that both President Donald Trump and Prime Minister Narendra Modi have “very good relationships at that level.”

The additional 25 per cent penalty on India’s purchases of Russian oil—bringing total levies to 50 per cent—was described by New Delhi as “unjust, unfair, and unreasonable.” Officials, however, maintained that positive signals are emerging from both sides.

The government has also reiterated the need to boost domestic consumption to insulate the economy from external shocks. Plans include changes to the Goods and Services Tax (GST) framework to reduce costs for daily-use and high-value goods ahead of the festival season.

While exporters brace for challenges in the short term, officials stress that long-term strategies are in motion. “We are pursuing market diversification, sectoral campaigns under Brand India, and stronger trade agreements. These are not quick fixes, but they will strengthen India’s position globally,” one senior official said.