Textile exporters need govt subsidy to survive

The textiles and apparel industry, which contributes 2.3% to India’s GDP, 13% of industrial production, and 12% of exports, is the country’s second-largest employer after agriculture, supporting 45 million livelihoods. The sector

is now facing uncertainty as its largest export destination, the United States, moves to levy 50% tariffs on imports from India.

A 21.6% year-on-year rise in overall exports to the US during the first four months of the current fiscal indicates front-loading of shipments to beat the tariff deadline. The industry is also banking on the upcoming festive season and diversification of export destinations to soften the impact.

Additionally, expectations are high from a possible GST rate cut to spur domestic demand

and the forthcoming Export Promotion Mission to ensure adequate credit availability.

Anil Peshawari, Chairman of Noida-based textiles and apparel exporter Meenu Creation LLP and executive committee member of the Apparel Export Promotion Council (AEPC), highlighted a 30% tariff disadvantage compared to garment exporters from Bangladesh, Vietnam, Indonesia, and Sri Lanka, which face tariffs of 18–20% in the US.

“India’s exports will anyway cost 30% more for buyers,” he said, calling for a direct government subsidy

of at least 10% to help bridge the tariff gap. He warned that companies may soon find it difficult to retain workers.

Peshawari noted that 30% of India’s textile exports are directed to the US, and diversification on this scale is not feasible. He said the industry could only fill one-third of the gap left by the US market, adding that markets in Australia, Canada, and Latin America are already saturated. In the US, he said, retailers will need to increase prices, leading to fewer orders and heightened uncertainty.

According to him, measures such as GST cuts and interest subvention will not help, as exporters already receive GST refunds and interest subvention does little in times of weak demand.