New Delhi: India’s textile exporters are turning their attention toward European markets after steep U.S. tariffs dealt a major blow to the industry. Many exporters, long dependent on American buyers, are now offering heavy discounts to keep their U.S. clients while seeking new opportunities in Europe to offset mounting losses.
The U.S. imposed tariffs of up to 50 percent on Indian textile and apparel imports in August, a move that has drastically reduced demand from one of India’s largest markets. The United States accounts for nearly 29 percent of India’s textile exports, and the sharp rise in duties has forced many companies to absorb the impact through reduced profit margins and pricing cuts.
In response, Indian exporters are accelerating their pivot to Europe, where trade relations remain strong and negotiations for a free trade agreement (FTA) are in an advanced stage. The European Union is already India’s biggest trading partner, with two-way trade valued at over 137 billion dollars as of March 2024. Exporters are also upgrading production standards to meet Europe’s stricter environmental and ethical sourcing regulations.
Industry groups warn that the situation is serious. A recent survey by the Confederation of Indian Textile Industry found that about one-third of textile and apparel firms saw their turnover fall by half in the past three months. Nearly all companies exporting to the United States are now seeking ways to diversify their markets to prevent further losses.
The Indian government has taken temporary measures to ease the strain, including suspending the 11 percent import duty on cotton until the end of September. Export organizations are urging the government to extend this relief and introduce additional support measures such as tax incentives and subsidies to keep the sector afloat.
Meanwhile, the Southern India Mills’ Association estimates that roughly 70 percent of the textile and clothing sector has been affected by the U.S. tariffs. Several firms are even considering relocating parts of their production to countries like Bangladesh and Oman, where trade terms are more favorable.
The World Bank recently warned that the tariffs could slow economic growth across South Asia, trimming India’s 2026 growth forecast from 6.6 percent to 5.8 percent.
As trade talks between India and the United States resume this week in Washington, exporters are hopeful that diplomatic negotiations may offer some relief. Until then, Europe’s growing demand and ongoing FTA discussions provide a glimmer of hope for India’s textile sector, which employs millions and serves as a vital pillar of the country’s manufacturing economy.