Apparel sector has expectations from Union Budget amid higher US tariffs
The Indian textile and apparel sector, worst hit by tariffs imposed by US President Donald Trump last year, is pinning its hopes on the upcoming Union Budget, while exporters are accelerating efforts to diversify markets and products.
The tariffs, announced in April and implemented from August 27, imposed duties of more than 60% on some categories, severely impacting India's competitiveness in its largest export market. As a result the region has lost market share in US exports
Tiruppur Exporters Association (TEA) President KM Subramaniam said the key demands of the industry include introduction of Focus Market Scheme for the US, increasing interest subvention to 5% without value ceiling to support MSME exporters and more support for modernization and technology upgradation.
In a letter to Union Finance Minister Nirmala Sitharaman, the South Gujarat Chamber of Commerce and Industry (SGCCI) has sought reduction of GST on chemicals used for man-made fibers like MEG, PTA and polyester staple fiber from 18% to 5%.
SGCCI President Nikhil Madrasi has also sought enhanced benefits under the Duty Drawback Scheme, Remission of Duties and Taxes on Exported Products Scheme (RoDTEP) and additional benefits of tariff refund linked to direct exports to the US equal to the actual tariff paid.
Sagar Shah, partner, tax and regulatory at EY India, said GST on key man-made fiber (MMF) raw materials should be reduced under Chapters 29 and 39 to correct the duty inversion. "This will ease accumulation of input tax credit, reduce capital costs and improve India's export competitiveness," he said.
Industry bodies like Clothing Manufacturers Association of India (CMAI) have also urged the government to impose a uniform 5% GST on ethnic apparel priced below `10,000 to support domestic brands.
America remains the largest market for Indian textiles and apparel, with exports worth about $10-12 billion annually. Of this, about $5 billion worth of products—mainly cotton textiles—are shipped from Tiruppur in Tamil Nadu. The share of man-made fiber (MMF) garments in exports is only 10%.
Haresh Calcuttawala, founder and CEO of Trazix, said the impact of US tariffs in 2025 was relatively small. "The impact was about 6-8%, even though US exports declined by 16-18%. This was because US buyers had already placed a lot of orders. We had a strong order pipeline before the tariffs were implemented," he said.
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