Indian Textile Exporters May Face Competitive Pressure In US Over Lack Of TRQ Benefits: Report

New Delhi, Jul 28 (KNN) Indian textile and apparel exporters may lose some competitive edge in the US market despite being placed in a relatively favourable tariff bracket under new trade measures, according to a report by Emkay Research.

The report noted that the US has imposed a 10 per cent tariff on Indian exports under Section 301, lower than the 12.5 per cent levied on countries such as China, Vietnam, Brazil and Thailand. However, India has not been granted tariff-rate quota (TRQ) exemptions, which have been extended to competitors like Bangladesh, Cambodia, Indonesia and Malaysia, ANI reported.

Impact of TRQ Exemptions

TRQ exemptions allow duty concessions on specified volumes of textile and apparel imports made using US-origin cotton and fibre. The absence of such exemptions means that, despite a lower tariff rate, Indian exporters could be at a relative disadvantage compared to countries benefiting from these quotas, the report said.

It added that this could reduce India’s competitiveness in certain segments of the US textile market.

India Still Relatively Better Placed

Despite this limitation, India remains among the relatively better-positioned exporters under the new tariff regime. The report estimates India’s effective tariff rate in the US at around 12 per cent, compared with about 25 per cent for Bangladesh, 22 per cent for China, and around 14 per cent for Vietnam and Indonesia.

Around 55 per cent of India’s exports to the US will attract the additional 10 per cent tariff, while the remaining 45 per cent are either exempt—such as pharmaceuticals and smartphones—or already subject to separate tariffs under Section 232 for sectors like steel, aluminium and auto components.

Export Trends and Outlook

The report highlighted that India’s exports to the US have shown improvement in recent months following the removal of earlier IEEPA-related tariffs. Monthly exports averaged about USD 8.4 billion over the past four months, compared with USD 6.5 billion in the preceding six months.

Emkay expects the new Section 301 tariffs to have only a limited impact on India’s overall export growth in the near term, with the relatively lower tariff offering some marginal advantage.

Trade Talks Key Going Ahead

The report cautioned that further US investigations into global manufacturing capacity could lead to additional tariffs on Indian goods. In this context, ongoing India-US trade negotiations will be important to secure lower tariffs and better market access for Indian exporters.

(KNN Bureau)