India’s ready-made garment (RMG) exports posted modest growth in the first nine months of FY2025–26, supported by strong demand from Japan, Saudi Arabia and Italy, even as shipments to the United States — India’s largest market — declined under the weight of tariff-related pressures.
Data from the Apparel Export Promotion Council (AEPC) showed that RMG exports rose 2.4% year-on-year to US $ 12 billion during April–December 2025. However, exports to the US fell 3% to US $ 3.6 billion from US $ 3.7 billion a year earlier. Shipments in January 2025 were down 3.8% compared with January 2024.
Among key markets, Japan recorded the strongest expansion, with exports surging 30% during the April–December period. Shipments to Saudi Arabia and Italy also rose sharply, by 18.5% and 16% respectively.
Industry analysts attributed the softness in the US market to tariff headwinds. Aniket Dani, Director at Crisil Intelligence, stated that Indian textile exporters had faced a significant disadvantage due to a combined 50% tariff — comprising 25% reciprocal and 25% penal duties — imposed between 27 August 2025 and 7 February 2026. He noted that the removal of penal tariffs by executive order on 7 February had provided partial relief, but Indian exporters continued to face higher reciprocal duties of 25% compared with 20% for Bangladesh and Vietnam, leaving them at a competitive disadvantage.
Exporters were compelled to absorb much of the additional burden by offering discounts of 15–18% to US retailers, compressing margins. Dani observed that the introduction of a uniform 15% tariff across countries would create a more level playing field, reduce the need for steep discounts and ease profitability pressures. He added that major textile clusters such as Tirupur, Panipat and Solapur were likely to benefit significantly in the US market under the revised structure.
Sudhir Sekhri, Executive Committee Member of AEPC, stated that India was now in a stronger position compared with the recent past. He indicated that earlier shipments had effectively faced duties of around 25%, whereas the new 15% tariff applied uniformly, providing Indian suppliers with a clearer competitive footing. He further explained that consignments not yet cleared by US Customs would be subject to the revised rate, and that effective duty costs for Indian exporters, depending on commercial agreements, could range between 6% and 17%, with potential additional benefits of 3–4% under the updated framework.
With tariff parity largely restored, industry stakeholders believe Indian exporters are better placed to convert structural strengths — including an integrated supply chain, established manufacturing clusters and a skilled workforce — into sustained competitiveness in both the US and emerging global markets.
However, analysts cautioned that while India’s competitive position relative to Bangladesh and Vietnam has improved, the country now competes more directly with China in the US market. The advantage is expected to be more pronounced in cotton-based apparel, given China’s stronger diversification into man-made fibre products.
