Indian Textile Exporters Turn to Europe as U.S. Tariffs Rise

With $137.5 billion in two-way trade in the fiscal year ending March 2024, the EU is India’s biggest trading partner for goods, representing a roughly 90% rise over the previous ten years.

To lessen the impact of high U.S. tariffs of up to 50%, Indian textile exporters are looking for new customers in Europe and providing discounts to current U.S. clients, according to industry insiders.

In August, President Donald Trump increased taxes on Indian imports, making them one of the highest of any trade partner. The levies applied to produce and items ranging from shrimp to jewelry and clothing.

Before negotiating export contracts, a Mumbai-based clothing exporter who asked to remain anonymous said that diversification into EU markets was a top priority for his firm and that an early trade agreement with the bloc would increase exports from India.

The EU and India’s trade negotiations have hit a pivotal stage as their teams strive to conclude a free trade agreement before the end of the year.

With $137.5 billion in two-way trade in the fiscal year ending March 2024, the EU is India’s biggest trading partner for goods, representing a roughly 90% rise over the previous ten years.

According to textile exporters, Indian companies are working harder to comply with the EU’s stricter regulations on chemicals, product labeling, and ethical sourcing.

According to Rahul Mehta, who is the chief mentor of the Clothing Manufacturers Association of India, exporters are modernizing their manufacturing facilities to fulfill these criteria.

Mehta noted that exporters are eager to lessen their reliance on the US.

In the fiscal year ending in March 2025, the United States accounted for about 29% of India’s total exports of around $38 billion, making it the country’s top market for textiles and clothing.

According to Vijay Kumar Agarwal, chairman of Mumbai-based Creative Group, whose U.S. exports account for 89% of its overall shipments, some exporters have begun to give discounts in an effort to keep U.S. clients.

According to Agarwal, the business may contemplate shifting manufacturing to Oman or neighboring Bangladesh after six months if U.S. tariffs continue to hurt, which may result in the loss of 6,000 to 7,000 of its 15,000 employees.

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