India’s Textile Export Opportunity: Tariff Edge, but No Free Pass
India’s textile industry has a rare opening. The United States’ latest tariff schedule places India at a 10 per cent rate, while Vietnam – its main rival – faces 12.5 per cent. For an industry long frustrated by competitors’ free trade advantages, this two-and-a-half-point gap looks like a win. But as exporters and former policymakers caution, global supply chains are built over decades, not around a small tariff differential. The real challenge lies in manufacturing scale, compliance, and market alignment.
What the US tariff change means for India
The new US tariffs give India a level playing field with Bangladesh, Indonesia, Cambodia, and Malaysia – all at 10 per cent. But Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), warns that a tariff-rate quota (TRQ) for Bangladesh and others could shrink India’s edge. “They may get further duty concessions on certain quantities,” he told Firstpost. “We have to be careful.”
India’s advantage over Vietnam is real but fragile. Vietnam exported over $44 billion in textiles and garments in 2025, making it the world’s second-largest apparel exporter after China. Its supply chain is deeply integrated with global brands like Nike, Adidas, and Lululemon. “A difference of 2.5 percentage points is an advantage, but existing supply chains are unlikely to relocate,” Sahai said.
Why India’s textile sector lags behind Vietnam and Bangladesh
India grows cotton, spins yarn, weaves fabric, and stitches garments – a complete value chain. Yet it has underperformed Vietnam and Bangladesh for two decades. Former Textiles Secretary Upendra Prasad Singh points to fragmentation: “Raw material is in one state, spinning elsewhere, weaving in another, processing and garmenting in different clusters. This increases logistics costs and delivery time.”
Government initiatives like PM MITRA Mega Textile Parks aim to create integrated hubs. “If we address scale, integrated manufacturing, and logistics, India’s competitiveness can improve substantially,” Singh said.
India’s cotton focus is a strategic weakness
Ajay Srivastava of the Global Trade Research Initiative (GTRI) argues India’s biggest mistake is betting on cotton while global demand shifted to synthetics. “Two-thirds of world garment trade is in synthetic, sportswear, and mixed fabrics. In India, two-thirds of exports are cotton-made garments. We are insignificant in two-thirds of what the world buys.”
Vietnam and Bangladesh built capacity around polyester and man-made fibres, becoming “stitching factories” for the world. India remains cotton-centric, missing the athleisure and fast-fashion boom.
Compliance and certification matter more than tariffs
Tariff preferences alone do not guarantee market access. Singh notes that Japanese retailer Uniqlo sources from only two Indian producers because of exacting standards. “They examine environmental standards, green certification, women’s facilities, sustainability practices, and water consumption. Unless we become fully compliant, tariff advantages won’t matter.”
Europe’s tougher sustainability rules and supply-chain due diligence norms make compliance even more critical.
Europe may offer a bigger opportunity than the US
India’s trade agreement with the United Kingdom and proposed EU free trade deal could eliminate 10–12 per cent duties on garments. Neeraj Duggal, director of Inovativa Global, says: “European companies are looking at investing in manufacturing facilities in India. These FTAs can reshape the apparel business.”
But Singh cautions: “Any FTA with the EU would benefit the sector, but tariff preferences open doors – only globally competitive manufacturers can walk through them.”
Frequently asked questions
Can India overtake Vietnam in textile exports?
Not immediately. Vietnam’s integrated supply chain and brand relationships are deeply entrenched. India’s tariff edge is small and could be eroded by TRQs.
What is India’s biggest textile export challenge?
Fragmentation. India’s value chain is scattered, increasing costs and delivery times. Integrated parks and synthetic textile capacity are needed.
Will the US tariff change boost Indian exports?
It offers a tactical edge, but long-term growth depends on scaling production, improving compliance, and shifting toward synthetic fabrics.
The road ahead
India has the raw materials, workforce, and a complete textile chain. The question is whether it can convert a short-term tariff advantage into a lasting manufacturing edge – or watch another opportunity pass by.