Despite US tariffs, India's textile sector headed for "boom"; GST reforms, new supply chains driving growth

By Vishu Adhana

New Delhi [India], September 15 (ANI): Despite tariff barriers imposed by the US, India's textile sector is poised for a "boom", sources in the Textile Ministry said, citing diversification of supply chains and the rationalisation of GST rates, which are expected to drive domestic consumption.

The ministry is stepping up efforts and boosting exports to European and Asian countries, with teams set to visit France, the UK, and Singapore in September to scout new markets and strengthen existing ones.

"We are not expecting a fall, but we are headed towards a boom in the textile industry. GST rationalisation, which is very pro-textiles, will have a huge impact on the domestic market," an official at the Textile Ministry told ANI on Monday.

Officials pointed out that 80 per cent of textile units are MSMEs, employing mostly women and rural workers, and that the sector is currently valued at USD 179 billion, projected to nearly double to USD 350 billion by 2030. India presently produces around 22,000 million garments annually, a figure expected to touch 40,000 million garments by 2030.

The official apprised that the ministry is working with businesses to diversify into new types of fabrics and apparel, which will help them tap niche markets such as Russia and Japan.

The steep tariffs of up to 50 per cent imposed by the Trump administration on Indian textiles have dealt a major blow to the sector, making exports to the US far less competitive compared to rivals like Bangladesh and Vietnam. Export orders from key hubs such as Tirupur, Noida, and Surat are being delayed or diverted, leading to a projected 5-10 per cent revenue drop for home textile firms this fiscal.

However, officials believe this was only an initial shock. "The US accounts for five per cent of India's total textile exports, so the impact is limited. GST cuts, from 12 per cent to five per cent on carpets and floor coverings, and 18 per cent to 5 per cent on MMF apparel, will help offset the tariff shock," the official said, adding that garments under Rs 2,500 are now tax-exempt, opening up a larger domestic market.

While noting negotiations with the US are underway, officials at the ministry said that New Delhi is looking at different markets and has started an outreach programme in various countries.

"We are asking embassies to set up exhibitions to promote Indian apparel, and we are also reaching out directly. This month, Textile Ministry teams will go to Singapore, France, and the UK, where they will hold talks with industry leaders and government officials. Our focus is diversification," the official added.

India exports textiles to more than 220 countries, and despite tariff disadvantages, shipments have shown resilience. According to ministry data, export growth between April-August 2024 and April-August 2025 was strong in Japan ( 23%), France ( 12%), Germany ( 10%), UAE ( 10%), UK ( 9%) and Indonesia ( 9%).

Officials, however, flagged a concentration risk: 70 per cent of India's textile exports rely on just 10 markets--the US, Germany, France, Japan, Italy, UK, Spain, Netherlands, Poland and South Korea. In FTA partner countries, the scope remains underutilised: while these markets import textiles worth USD 199 billion annually, India's share is only USD 11.3 billion (5.68 per cent).

"There is a huge untapped opportunity," the official noted, pointing out that in 40 major markets across Africa, Latin America and CIS countries--together importing USD 590 billion worth of textiles--India's share is only 5.25%.

MSMEs are central to this export push. Their share in India's total exports has risen from 44 per cent in 2022-23 to 47 per cent by May 2024-25, while their contribution to Gross Value Added (GVA) climbed from 27 per cent in 2022 to 31 per cent in 2024.

The Indian textile industry has a strong raw material base--cotton, silk, wool, jute, manmade fibre--and manufacturing strength across the value chain from fibre to fabric to garments.

Meanwhile, the government is extending a series of mitigating measures such as subsidised interest rates, collateral-free loans and credit guarantees to labour-intensive exporters. Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), guarantees worth ₹10.8 lakh crore have been extended to over 1.24 crore enterprises, with 85 per cent coverage for women entrepreneurs.

India has signed 15 Free Trade Agreements (FTAs), including the recently concluded India-UK pact, to reduce tariff and non-tariff barriers and make exporters more competitive. Yet, officials admit that India's share in top FTA markets like Japan, South Korea, UAE and Australia remains under-utilised.

At the same time, schemes like PM MITRA Parks, the PLI scheme for MMF apparel and technical textiles, SAMARTH skilling programme, and the RAMP initiative with a Rs 6,000 crore outlay are expected to significantly boost MSME participation, enhance competitiveness, and prepare India for new markets, sources said. (ANI)

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