The tariff war between the US and its two neighbours — Mexico and Canada — could cheer up the Indian textile industry. There is a possibility that some of the large clients may source more apparels from India due to the tariff on materials from Mexico and Canada. In the last one year, the political unrest in Bangladesh and Sri Lanka has led to some diversion of apparel business to India.
The current situation involving US, Mexico and Canada could help Indian companies further. However, scaling the operations at a short notice would be the biggest challenge, said industry sources.
The US is the world’s single largest apparel importing country, primarily sourcing from Asia. In 2024, apparel exports to the US were $5 billion, an 11 per cent growth over the previous year. Even 1-2 per cent diversion from both Mexico and Canada will be incremental over what is being planned, they say.
Prabhu Dhamodharan, Convenor of Coimbatore-based Indian Texpreneurs Federation (ITF), said Mexico exports around $3 billion worth of apparel and $2 billion worth of non-apparel textile products to the US. Within the apparel segment, $2 billion worth of cotton apparel and $1 billion worth of man-made fiber (MMF) apparel are exported to the US from Mexico.
In addition, small parcel exports are being re-routed from China to Mexico to reach the US, taking advantage of concessions available for small parcel e-commerce exports.
India to gain
The imposition of duties on Mexican exports would benefit competing nations like India. India stands to gain particularly in cotton apparel, due to the similarity of product offerings.
Furthermore, India can explore the possibility of addressing reciprocal tariffs by reducing the import duty on US cotton from 11 per cent to 5 per cent, while seeking concessions on US tariffs on apparel and home textile products. “This strategic move could be a game changer in the new and evolving trade dynamics This will also help India increase its market share in US apparel imports from the current 6 per cent to double digits, adding an additional $4 billion in exports from India,” he said.
Raja M Shanmugham, former president of Tiruppur Exporters Association, said the disruption would witness lots of repercussions and fallouts, some might be advantageous, and some might be disadvantageous too.
“It might bring some additional business for the future provided we too are not charged with additional tariffs. We have to wait and see. Moreover, we also need to get equipped by developing all required infrastructure supports in the existing clusters in our country like labour housing and up skilling,” said Shanmugham, who is Managing Director of the Tiruppur-based Warsaw International, a leading garment exporter.
The Indian textile industry is today a good place to grow, but the biggest challenge is to upgrade the capacity on fabric and apparel, said Rajkumar Ramasamy, Managing Director of Best Corporation, a major exporter of knitted garment from Tiruppur. Mexico and Canada have good expertise, he added.
A source said it would be difficult for Indian companies to immediately upgrade infrastructure at a short notice. Also, after investing huge sums of money on machinery, there is no visibility for the next one year, said an industry source in Tiruppur. “It is a wait and watch situation with a clear clarity expected in the next 2-3 months,” the source said.
Every year, garment exports to the US happens between May and August to ensure that the goods are on the shelf on time for Christmas and New Year sale, the source said.
