The Indian textile industry’s horizon has cleared up significantly with the US reducing tariffs on imports from 25% to 18%. ICRA’s fresh report marks a key upgrade, shifting the sector’s outlook from ‘negative’ to ‘stable’ amid ongoing trade dynamics.
Exporters faced headwinds, but projections now show a temporary 3-5% dip in FY 2025-26 exports, followed by a vigorous 8-11% uptick in FY 2026-27. Margins are set to dip to 7.7% this year before recovering to 9.5% in FY 2027.
With FY 2024-25 exports reaching $16 billion—over a third directed to the US—the tariff cut couldn’t be more welcome. Previous hikes compelled discounts to US buyers, trimming profits by 2%.
ICRA’s insights underscore the toll on export-oriented segments like fabrics, diamonds, and hides. Yet, the tariff easing, paired with emerging India-EU and bilateral trade pacts, heralds a renaissance for manufacturing outflows.
Particularly advantageous for workforce-intensive areas such as apparel, marine products, and shoes, these changes sharpen India’s global edge. The agency stresses the importance of multi-market strategies to buffer against single-country vulnerabilities.
As international commerce steadies, this development positions Indian textiles for resilience and expansion, fostering a more secure export landscape.