Revival in Volumes for Textile and Leather Companies Amid India-US Trade Deal
India’s textile, apparel, and leather exporters are optimistic about a rebound in orders from the United States, thanks to recent tariff reductions proposed in a new trade deal between India and the US. Industry leaders believe these changes will enhance competitiveness, improve profit margins, and revive order volumes that have faced challenges over the past year. With India poised to benefit from one of the lowest tariff regimes among major Asian manufacturing nations, exporters anticipate increased sourcing from global brands, particularly benefiting small and medium-sized enterprises in key production hubs.
Positive Outlook for Textile and Apparel Exports
Industry representatives are expressing confidence that the reduction in tariffs will lead to a significant increase in sourcing by global brands. Prabhu Dhamodharan, convenor of the Indian Texpreneurs Federation, noted a rising interest from US buyers in Indian products. He projected that apparel and home textile exports could see month-on-month growth in double digits starting from the 2026-27 fiscal year. This growth could elevate the monthly apparel export run rate to between $1.5 billion and $1.6 billion, up from the current $1.3 billion. The expected increase in orders is seen as a crucial step toward revitalizing the sector, which has been under pressure due to high tariffs and competitive challenges.
Enhanced Competitiveness in the US Market
A Sakthivel, chairman of the Apparel Export Promotion Council, emphasized that the improved trade terms would significantly boost the competitiveness of Indian apparel products in the US market. The reduction in tariffs is particularly beneficial for small and medium exporters located in clusters such as Surat, Gurugram, and Tirupur. The tariff relief is expected to create a more level playing field, allowing Indian exporters to compete more effectively against rivals from countries like Bangladesh, Sri Lanka, Vietnam, and China. This shift is anticipated to restore pricing power and improve profit margins, which have been squeezed by the need to offer substantial discounts in the past.
Impact on the Leather Sector
The leather industry has also welcomed the US decision to lower tariffs to 18%, describing it as a “double dhamaka” that follows India’s strategic trade agreement with the European Union. Israr Ahmed, former vice-president of the Federation of Indian Export Organisations and managing director of the Farida Group, highlighted that exporters had previously been forced to absorb high tariffs by providing discounts of 20-30%. With the new tariff rate being lower than those faced by competitors like Bangladesh and Vietnam, these discounts will no longer be necessary. This change is expected to help restore pricing structures and improve profit margins for exporters.
Future Prospects for Indian Exporters
Rafiq Ahmed, chairman of Kothari Industrial Corporation, acknowledged that competition in the US market has intensified over the past year. However, he remains optimistic that long-standing relationships will enable Indian exporters to regain their footing. He believes that orders, which had diminished over the past year, will begin to flow again as the market stabilizes. Yavar Dhala, vice-president of the Indian Shoe Federation and CEO of Infinite Leather, projected that India’s share of leather exports to the US could rise from approximately 22% to nearly 30% this year. He also noted that factories that had reduced their operating days due to high tariffs could return to a full six-day work week, further enhancing production capabilities.
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