India’s Textile Exports Face Hit from US Tariffs, But Relief May Come from EU and UK Deals

India’s textile and apparel exports are expected to dip in 2026 due to steep US tariff hikes, which may reduce total exports by 9–10 percent to around \$30 billion. The US, which accounts for nearly 30 percent of India’s textile exports, raised tariffs from 25 to 50 percent, putting Indian exporters at a cost disadvantage.

However, the impact could be cushioned by a few factors:

India’s strong position in cotton-based textiles

Rising exports of cotton yarn and fabric, where India has a supply chain edge

Expected growth in exports to the UK, EU, and Middle East under Free Trade Agreements (FTAs)

Government support through incentives and outreach to new markets

While a major decline is expected in 2026, exports for 2025 are likely to hold steady due to early shipments sent ahead of the tariff hike. The India-UK FTA is especially promising, potentially opening up better access to the UK’s \$23 billion import market.

Margins for ready-made garment and home textile exporters are expected to fall by 3–5 percentage points unless exporters can successfully renegotiate prices with US buyers.