US Sec 301 tariffs unlikely to hit India's exports, textiles need close watch, says FIEO chief
Trade body assessment indicated the new US forced-labour tariff is unlikely to materially affect the bulk of India's exports to the US, since India was placed in the lower 10% tariff tier
Products already covered under existing Section 232 national-security tariffs (such as steel and aluminium) are not additionally affected by the new measure, limiting overlap
Textiles and apparel were flagged as the sector requiring closer monitoring, given a proposed tariff-rate quota (TRQ) mechanism available to some competing exporting countries but not to India
India was noted to have already furnished evidence of its safeguards against forced-labour-linked imports as part of the review process
India's Textile and Apparel Export Profile and Government Support Schemes
Textiles and apparel form one of India's largest labour-intensive export sectors and one of the most exposed to layered US tariff actions, since apparel exports to the US had already faced escalating duties through 2025 before this latest forced-labour measure. The sector is supported by a cluster of government schemes aimed at improving cost-competitiveness and formalisation.
Key Details
- India's textile and apparel exports (including handicrafts) touched a record high around US$37.7 billion in FY25, with ready-made garments a major component of overall textile export value
- Key support schemes: the PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme for integrated manufacturing clusters, the Production-Linked Incentive (PLI) Scheme for Textiles (targeting man-made fibre and technical textiles), and the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which refunds embedded, non-creditable taxes and duties on exports
- Apparel exports to the US had already faced a "reciprocal tariff" regime escalating through 2025 (from a 10% baseline to as high as 50% on some product lines) prior to this forced-labour tariff being layered on top, illustrating cumulative exposure specific to the sector
Because textile exports already carry the highest pre-existing tariff burden among India's major US-bound export categories, even a modest additional 10% forced-labour duty compounds sector-specific cost pressure more than it does for less tariff-exposed sectors — explaining why trade bodies single out textiles for continued monitoring even while judging the overall measure low-impact.
Tariff-Rate Quotas (TRQs) as a Selective Trade Relief Instrument
A tariff-rate quota allows a fixed quantity of a good to enter at a lower "in-quota" duty, with any volume beyond that quantity charged the full "out-of-quota" rate — a two-tier mechanism distinct from an absolute quota, which caps volume outright. TRQs are commonly used in agriculture and textiles to balance a degree of market access against domestic industry protection, and became more prevalent globally after the WTO Agreement on Agriculture (1995) required converting non-tariff barriers into tariff-based equivalents.
Key Details
- Under the current US measure, a TRQ carve-out tied to the use of US-origin cotton and fibre was made available to some competing textile-exporting economies but has not been extended to India, meaning Indian textile exporters face the full duty rate on all export volumes rather than a preferential quota tranche
- Because TRQs reward use of a specific input-origin (US-origin cotton/fibre), the relief is structurally tied to a sourcing choice rather than to a country's overall trade relationship with the US
- The absence of an equivalent Indian carve-out means competing garment-exporting economies with such quota access could gain a relative cost edge on comparable product lines even where headline tariff tiers are otherwise similar
The textile-specific caution flagged alongside an otherwise reassuring overall tariff assessment stems directly from this TRQ asymmetry — India's broad exports benefit from the lower tariff tier, but its textile exports miss out on an additional, input-linked relief mechanism available to some competitors.
- India's tariff tier under the new US forced-labour measure: 10% (lower band)
- India's textile and apparel exports (incl. handicrafts) reached a record roughly US$37.7 billion in FY25
- Products under existing Section 232 tariffs (steel, aluminium, and related derivatives) are excluded from additional exposure under the new forced-labour measure
- The proposed textile/apparel TRQ tied to US-origin cotton and fibre use has been extended to some competing exporting economies but not to India
- Government textile-sector support schemes include PM MITRA Parks, the PLI Scheme for Textiles, and RoDTEP (extended through September 2026)