Indian Garment Exporters Hope for Tariff-Rate Quota From the U.S. to Level the Playing Field

Indian garment and textile exporters are pressing for a tariff-rate quota (TRQ) arrangement with the United States, hoping to close a gap that has left them at a disadvantage even after securing a comparatively favorable tariff rate under Washington's revised trade structure.

How India's Tariff Position Compares

Ahead of the expiry of earlier Section 122 tariffs in late July, the US rolled out fresh duties tied to Section 301 forced-labor investigations covering roughly 60 countries. India landed in the more favorable of two tiers, facing a 10% tariff alongside 16 other countries, while 43 other economies — including China, Vietnam, and Thailand — were placed in a higher 12.5% bracket. On paper, that gives Indian exporters a real cost edge over some of their biggest global rivals.

The TRQ Gap That's Undercutting the Advantage

The catch is that India was left out of a separate benefit: tariff-rate quota exemptions that Washington extended to Bangladesh, Cambodia, Indonesia, and Malaysia. Under these TRQ arrangements, those countries can ship set volumes of textile and apparel goods to the US completely duty-free, provided the products are made using US-origin cotton and fiber. Indian exporters have no equivalent relief, meaning they continue paying the full 10% rate across the board, even as competitor-made goods using American cotton enter the US market tariff-free.

Industry analysts have flagged this as a meaningful structural disadvantage. Even though India's headline tariff rate looks better than China's or Vietnam's, the TRQ carve-out could still divert sourcing orders away from India toward countries that can offer genuinely duty-free access on qualifying goods. The Confederation of Indian Textile Industry (CITI) has warned that this differential treatment risks pulling business away from Indian manufacturers despite the rate advantage.

Why This Matters: The Scale of India's US Exports

The US is by far India's largest textile and apparel export market, worth close to $11 billion annually — roughly 28% of India's total textile and apparel shipments abroad. By comparison, Bangladesh exported around $8 billion worth of apparel to the US in 2024, while Indonesia and Cambodia each shipped about $4 billion. Any shift in sourcing patterns among major US retailers, even a modest one, could translate into a significant swing in order volumes for Indian manufacturers, many of which are small and medium-sized enterprises with limited ability to absorb further cost pressure.

A Bruising Year for Indian Textile Exporters

This latest tariff structure follows a turbulent stretch for the sector. Indian textile and apparel exports were hit hard when the US imposed a steep 50% tariff in late August, tied partly to India's continued purchases of Russian oil, prompting some American buyers to explore shifting production to countries like Ethiopia and Nepal. US shipments fell more than 50% quarter-on-quarter for nearly a quarter of textile exporters surveyed by CITI, with the industry body warning of potential losses of $5-6 billion for the year without a resolution.

Despite the disruption, India's overall textile and apparel exports held roughly steady at $37.5 billion in 2025, as exporters diverted shipments toward markets like the EU, UAE, Japan, and Africa. A separate trade agreement with the European Union, which will remove duties on 90% of Indian goods including a roughly 12% textile tariff, has offered exporters some relief and an alternative growth avenue while they push New Delhi to finalize a broader deal with Washington.

What Exporters Are Asking For

Industry groups, including CITI and the Apparel Export Promotion Council (AEPC), are urging the Indian government to negotiate TRQ parity with the US as part of any broader bilateral trade deal — arguing that without it, India's lower headline tariff rate offers only a partial and potentially short-lived advantage over regional competitors. For the latest official updates on India-US trade negotiations, see the Indian Ministry of Commerce and Industry.

With American retailers closely watching how the tariff and quota landscape settles, the coming months are likely to be pivotal in determining whether Indian garment exporters can defend their market share against Bangladesh, Vietnam, and other rising competitors.