US Tariffs On Indian Exports: What Textile Companies Are Doing To Stay Competitive

More and more domestic exporters are looking to Europe as a solution for their woes arising from soaring US tariffs. Trade talks between India and the EU have reached a critical phase.

Europe already stands as India’s largest trading partner for goods, with two-way trade reaching $137.5 billion in the fiscal year ending March 2024, a near 90 per cent increase over the past decade. 

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Indian textile exporters are increasingly turning their attention to Europe as they grapple with steep US tariffs of up to 50 per cent, industry executives revealed. 

The move comes after President Donald Trump doubled tariffs in August on Indian imports, placing India among the most heavily taxed trading partners and affecting goods ranging from garments and jewellery to shrimp, reported Reuters.

Citing a Mumbai-based garment exporter, the news agency highlighted that his company is prioritising diversification into European Union markets. An early trade agreement with the EU could provide a vital boost to shipments from India, he noted. 

Trade talks between India and the EU have reached a critical phase, with both sides working to meet a year-end target for signing a free trade pact.

EU: A Growing Market for India

Europe already stands as India’s largest trading partner for goods, with two-way trade reaching $137.5 billion in the fiscal year ending March 2024, a near 90 per cent increase over the past decade. 

To tap into this lucrative market, Indian exporters are stepping up efforts to meet stringent EU standards on chemicals, product labelling, and ethical sourcing.

Rahul Mehta, chief mentor of the Clothing Manufacturers Association of India, said exporters are upgrading production facilities to comply with these rigorous requirements. The focus is not just on accessing new markets but also on reducing dependence on the US, he added.

Discounts to Retain US Clients

While seeking new buyers in Europe, exporters are also offering discounts to retain existing US clients. Vijay Kumar Agarwal, chairman of the Mumbai-based Creative Group, explained that the company’s US exports account for 89 per cent of its total shipments.

"If US tariffs continue to bite, the company could lose 6,000 to 7,000 of its 15,000 workers," Agarwal warned. He added that, after six months, the firm may consider relocating production to Oman or neighbouring Bangladesh to mitigate losses.

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