India’s textile exporters are breathing easier after the US lowered import tariffs on their goods from 25% to 18%. This pivotal change has prompted ICRA to elevate the sector’s outlook from ‘negative’ to ‘stable’, according to a new analysis.
The upgrade reflects optimism from recent trade talks between India and the US. Exports are expected to contract 3-5% in FY 2025-26 before surging 8-11% in FY 2026-27, painting a picture of short-term caution and long-term promise.
Corporate margins, currently hovering near 7.7% for FY 2026, are forecasted to climb back to 9.5% by FY 2027. Last year, textiles contributed $16 billion to India’s export coffers, with the American market claiming a substantial one-third share.
The relief is timely, countering damages from last year’s tariff escalations that hit apparel, gems, and leather hard. Exporters had to slash prices for US clients, resulting in a 2% margin erosion.
Future boosts include the anticipated India-Europe FTA and other bilateral accords, which will enhance competitiveness for labor-heavy industries like textiles, seafood, and footwear.
In a strategic pivot, ICRA recommends spreading market presence to reduce dependency risks. As tariffs ease and deals materialize, India’s textile powerhouses are gearing up for sustained growth in a fluctuating world economy.