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US-India Trade Deal Slashes Tariffs, Sparks Apparel Export Boom

The Indian apparel export sector is revitalized by a new US-India trade deal that lowers tariffs to 18%, providing a competitive edge. AEPC Chairman A Sakthivel credits the turnaround to government efforts, highlighting India's strong domestic supply chain of raw materials as a key advantage over competitors like Bangladesh and Vietnam. However, the industry anticipates a significant labour shortage due to multiple new trade agreements and is seeking government subsidies for worker hostels. Despite this challenge, exporters are urged to expand capacity and upgrade facilities to capitalize on the upcoming boom period for the textile industry.

Key Points: US-India Trade Deal Cuts Tariffs, Boosts Apparel Exports

  • New US-India deal lowers tariffs to 18%
  • Industry relief after six months of turmoil
  • Raw material strength is key advantage over rivals
  • Expected labour shortage is major future challenge
  • Next decade hailed as boom period for textiles
3 min read

India well-positioned to lead: Chairman of Apparel Export Promotion Council after trade deal with US

AEPC Chairman hails new US trade deal, citing 18% tariff advantage and domestic supply chain strength for a decade of textile industry growth.

"With a lower tax rate of 18%... India is well-positioned to lead the sector. - A Sakthivel"

New Delhi, February 3

The Indian apparel export sector is breathing a sigh of relief and looking toward a decade of unprecedented growth. Following a period of turbulence and heavy penalties, a recent government announcement has revitalised the industry, particularly in hubs like Tiruppur.

On the recently announced US-India trade deal, that proposed to lower the tariffs to 18%, A Sakthivel, Chairman of the Apparel Export Promotion Council (AEPC) and the Founder & Chairman of Poppys Knitwear said, "With a lower tax rate of 18% compared to other nations and a strong domestic supply chain, India is well-positioned to lead the sector."

"For the last six months, we've been going through a lot of turmoil since the tariffs were imposed. We were struggling because we didn't want to leave the buyers, and the buyers didn't want to leave the exporters. With yesterday's news, we reached a point of saturation on whether we could take further orders. The good news came yesterday, and we owe a big thanks to our Prime Minister and Commerce Minister," Sakthivel said.

"We have a lot of advantages over other countries like Bangladesh, Cambodia, or Vietnam. We have the raw material strength--whether it's cotton, man-made fibre, or viscose. Everything is manufactured in India, including accessories. Other countries have to import almost everything. This boost will benefit the entire sector, from fibre to fashion and from farm to garment manufacturing," he said.

While the future looks bright, the industry anticipates a significant challenge: a labour shortage. To address this, exporters are calling for government support to improve worker welfare and infrastructure.

"The only problem we're going to face is the labour force. With the various FTAs--UK, EU, Oman, New Zealand, and the BTA with the USA--we're going to face a big labour shortage. We request the State and Central Governments to consider a 50% capital subsidy for the construction of hostels for women workers and a 5% interest subsidy. Investing in a hostel is a 'dead investment' compared to machinery, so we need government help to face these labour issues," he said.

Despite the challenges, the mood remains overwhelmingly positive. Exporters are being urged to upgrade their facilities and expand production to capitalise on what is being called a "boom period" for the Indian textile industry.

"The next decade is going to be for our textile industry. I wish all exporters would realise that and expand their capacity, upgrade their facilities, and increase their productivity," he added.

- ANI

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Reader Comments

S
Sarah B
As someone who works in the Tiruppur cluster, I can confirm the relief is palpable. The last six months were very stressful. This deal gives us the confidence to invest in new machinery and plan for the future. The labour shortage point is very valid though.
P
Priya S
Great step forward! But the Chairman's request for hostels for women workers is crucial. If we want to scale up, we must ensure safe and dignified working conditions, especially for women migrating for work. That's true nation-building.
R
Rohit P
A lower tariff than competitors is a massive advantage. Bangladesh and Vietnam have had the edge for too long. Now it's our turn. Hope the exporters really invest in upgrading facilities and don't just sit on this opportunity.
M
Michael C
While the optimism is good, let's be cautiously hopeful. The industry has faced boom and bust cycles before. The government needs to follow through on the infrastructure and labour support, not just sign the deal and forget.
K
Kavya N
This will create so many jobs! From cotton farmers in Gujarat to garment workers in Tamil Nadu. The integrated supply chain is our superpower. Excited to see Indian fashion on the global stage even more. 🙌

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