Indian textile sector worried over Trump's 500% tariff threat

The Indian textile and garment industry is deeply concerned over US President Donald Trump's warning of imposing a 500% tariff on imports from countries that purchase Russian oil. The announcement has already unsettled markets, with shares of Indian exporters falling sharply in Thursday's (8 January) trading.

If implemented, the proposed tariff would be added to the existing 50% import duty imposed last year, significantly increasing the cost burden on Indian goods entering the US, with exporters fearing such a move could severely disrupt trade flows.

Apprehension is particularly visible in Tiruppur, Tamil Nadu, the country's largest knitwear cluster, which contributes nearly 90% of India's knitwear exports.

Ajay Srivastava, founder of the Global Trade Research Initiative, warned that a 500% duty—along with possible secondary restrictions on services—could virtually shut down India's $120 billion annual exports to the US, its largest overseas market.

Vijay Agarwal, chairman of the Cotton Textiles Export Promotion Council, noted that overseas buyers who had earlier planned to shift sourcing to India are now reconsidering due to uncertainty surrounding Trump's threat. Since August last year, the existing 50% US tariff has already forced Indian exporters to cut prices, seek alternative markets, and reroute shipments through neighbouring countries.

The US currently accounts for nearly 30% of India's garment exports. During Fiscal Year 2024–25, India exported apparel and textiles worth $37 billion. Industry data shows apparel exports rose marginally, while textile shipments declined in the April–November period.

Rajat Jaipuria, managing director of Rajalaxmi Cotton Mills, cautioned that a 500% tariff would effectively function as an embargo, with severe consequences for the sector.