Key Points

The increase in tariff rates by 50 per cent over the baseline, effective from August 27, 2025, is expected to hurt the competitiveness of Indian apparel exporters.

Speaking to ANI on Sunday about the impact of the tariffs, the AEPC VP said, "Exporters who send 100% of their goods to the U.S. are directly affected, because future orders now carry a 25% penalty... Throughout the past three weeks, I have consistently maintained that this difficulty is only temporary and will be resolved."

The AEPC Vice President explained that the assurances given by both governments indicated a potential resolution. "Today's developments confirm that: President Trump has clearly stated that the U.S. has good relations with India, and our Prime Minister responded that this strong relationship will continue," he told ANI.

Sakthivel added that the involvement of India's External Affairs Minister further reassured exporters. "Our External Affairs Minister also confirmed that dialogue between the two nations will begin immediately. This is a win-win situation for both sides, for American buyers and for Indian exporters," Sakthivel further said.

Earlier on Saturday, Prime Minister Modi responded warmly to Donald Trump's affirmation of India-US ties, expressing that he "deeply appreciates and fully reciprocates" the US President's sentiments and positive assessment of the bilateral relations.

PM Modi noted India-US ties as "forward-looking" towards a "Comprehensive and Global Strategic Partnership".

"Deeply appreciate and fully reciprocate President Trump's sentiments and positive assessment of our ties. India and the US have a very positive and forward-looking Comprehensive and Global Strategic Partnership," the Prime Minister wrote in a post on X.

Earlier on Friday (local time), President Trump at the White House, called the India-US ties a "very special relationship" and affirmed that he and PM Modi would always be friends, asserting that there is "nothing to worry about".However, he expressed displeasure over what "he (PM Modi) is doing" in contemporary times.

When asked by ANI, "Are you ready to reset relations with India at this point?", US President Trump said, "I always will. I'll always be friends with (PM) Modi. He's a great Prime Minister. I'll always be friends, but I just don't like what he is doing at this particular moment. But India and the United States have a very special relationship. There is nothing to worry about. We just have moments on occasion."

Meanwhile, the outlook for the Indian apparel export industry has been revised to Negative from Stable by rating agency ICRA, following the upward revision in tariff rates by the US.

The move is expected to adversely impact India's overall apparel exports, with revenues likely to decline in the coming fiscal.

ICRA, in a statement on Monday, stated, "Lower exports and pressure on pricing to contract industry operating margins by 200-300 bps in FY2026; impact could be steeper for entities with higher concentration on the US market".

The impact of tariffs will vary depending on product categories. For some specifications, an immediate shift of US orders to lower-tariffed countries may not be feasible due to differences in manufacturing capabilities and the time needed to build capacities.

In constant currency terms, India's apparel exports have been largely flat over the past five years, due to subdued demand in key markets and a shift in sourcing to Bangladesh and Vietnam. This has reduced offtake from countries such as the UK and the UAE.

However, exports to the US, which account for nearly one-third of India's total exports, grew by 4.8 per cent in the same period as Indian exporters targeted volume growth in the US market.

The increase in tariff rates by 50 per cent over the baseline, effective from August 27, 2025, is expected to hurt the competitiveness of Indian apparel exporters.

- ANI