Indian Textile Exporters Pivot to Europe Amidst Steep US Tariffs

Indian textile exporters are proactively addressing the significant challenge posed by steep US tariffs, which can reach as high as 50%. In response to these heightened import duties, which President Donald Trump doubled in August across a range of Indian goods from garments to jewellery, industry executives confirm a dual strategy: aggressively seeking new buyers in Europe while offering crucial discounts to their existing US customer base. This strategic pivot aims to cushion the blow from what are now among the highest tariffs imposed on any of India's trading partners.

A key focus for Indian exporters is the diversification into European Union markets. One Mumbai-based garment exporter, speaking anonymously due to ongoing contract negotiations, highlighted his company's priority in this regard, emphasizing how an early trade deal with the EU would significantly boost shipments. Trade negotiations between India and the EU have entered a decisive phase, with teams working towards a year-end target for signing a free trade pact. The EU already stands as India's largest trading partner for goods, recording a two-way trade volume of $137.5 billion in the fiscal year ending March 2024, representing a remarkable nearly 90% increase over the past decade. To meet the EU's stringent requirements, Indian exporters are stepping up efforts to comply with tougher standards on chemicals, product labelling, and ethical sourcing, actively upgrading production facilities, according to Rahul Mehta, chief mentor of the Clothing Manufacturers Association of India, who also noted the industry's desire to reduce its dependence on the US market.

Despite the push towards diversification, the US remains a critical market for Indian textiles and apparel. In the fiscal year ending March 2025, the US accounted for nearly 29% of India's total textile and apparel exports, which amounted to approximately $38 billion. To retain this substantial customer base, some exporters have begun offering discounts. Vijay Kumar Agarwal, chairman of Mumbai-based Creative Group, whose US exports constitute 89% of his company's total shipments, confirmed this approach. However, the long-term impact of sustained US tariffs raises serious concerns. Agarwal indicated that if these tariffs continue to bite, his company could face the difficult decision of losing 6,000 to 7,000 of its 15,000 workers. Furthermore, he warned that after six months, his company might be compelled to consider relocating production to alternative locations such as Oman or neighboring Bangladesh.