US imposes 25 percent tariffs on India: How will it affect the apparel industry?

The U.S. Donald Trump has announced 25 percent tariffs on goods starting today. The move, which singles out India for harsher trade conditions than its major peers, has drawn outrage from India's opposition and caused a slump in the rupee. India's government has vowed to protect its labor-intensive agriculture sector and remains committed to a "fair, balanced and mutually beneficial bilateral trade agreement," according to the BBC.

In a statement to Parliament on Thursday, Commerce Minister Piyush Goyal said the government is "examining the implications of the recent developments" and is "engaged with all stakeholders including exporters and industry" to assess the situation. “The government attaches the utmost importance to protecting and promoting the welfare of our farmers, workers, entrepreneurs, exporters, MSMEs and all sections of industry. The government will take all necessary steps to secure and advance our national interest,” he said.

On his social media platform, Truth Social, President Donald Trump referred to India as a "friend," but also threatened an "unspecified penalty" over its purchases of Russian oil and weapons. He criticised India's high tariffs, calling them among the highest in the world and noting that the U.S. has done "very little business" with the country as a result.

Analysts believe the new tariffs could significantly impact India's aspirations to become a global manufacturing hub. Neil Saunders, an analyst at GlobalData, explained that India's "steep tariff rate" makes it less competitive for industries like apparel, where cost is a critical factor. He suggested that retailers who were considering India as an alternative to China might now look elsewhere.

Dr. Sheng Lu, a professor of apparel studies at the University of Delaware, added that a recent study of U.S. fashion companies found they already considered sourcing from India to be a relatively high risk for facing additional tariffs. Lu noted that while the new tariffs could temporarily hinder companies from making new commitments, India's long-term outlook as an apparel sourcing hub remains positive.

The recent tariff threat is not the first instance of trade friction between the two countries. In March, Trump had also voiced concerns about India's high tariffs, stating they were "massive" and "restrictive." At that time, industry experts like Robert P. Antoshak of Grey Matter Concepts suggested that India stood to gain more by lowering its tariffs, which could lead to increased imports of cotton and synthetic fibres, helping its mills meet the growing demand for activewear and other synthetic-based clothing.

The news comes just a week after India and the UK confirmed a new trade agreement, with the Clothing Manufacturers Association of India (CMAI) anticipating a 0 percent import duty to the UK by late 2026. This deal is expected to spur new planning and buyer activity in the Indian fashion industry, offering a potential counterbalance to the new U.S. trade challenges.