US trade deal lifts pressure on Indian textiles after tariff shock

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• US cuts tariffs on Indian textiles to 18 percent, easing pressure on exporters
• India's textile exports to US worth $10.05 billion in FY24, 28 percent of total
• Exporters hope for demand revival after months of trade strain and discounts

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After months of trade-related uncertainty, the easing of tensions between India and the US has come as a relief for India’s textile and apparel exporters, who depend heavily on the American market for nearly a third of their overseas sales. The reduction in tariffs on Indian goods to 18% is expected to ease pressure on pricing and revive stalled orders, even as exporters remain cautious about how quickly demand recovers.

On February 2,  US President Donald Trump said the United States will cut reciprocal tariffs on India to 18% from 25% and eliminate non-tariff barriers, while India will reduce its own trade barriers and boost purchases of US energy, technology, and agricultural products as part of a bilateral trade deal.

The US accounts for about 28% of India’s textile exports, with shipments worth $10.05 billion in FY24. Apparel forms the biggest share, followed by home textiles and made-ups such as bed linen, towels, carpets, curtains and upholstery. India’s total textile and apparel exports stood close to $38 billion in FY25.

The sector had been under strain after the US imposed a 50% tariff on Indian goods in late August, one of the highest globally, even as trade negotiations were ongoing. In November 2025, US imports of textiles and apparel from India declined by 31.4% year-on-year, according to an analysis by the Confederation of Indian Textile Industry (CITI).

To retain US buyers, Indian exporters were forced to offer heavy discounts, with several operating at minimal or even negative margins, betting on a resolution through an India-US trade deal. In parallel, companies stepped up diversification, increasing sales to the UK and Europe and routing some US orders through offshore manufacturing units in Africa.

The sector contributes around 2% to the country’s GDP.