What Happened
- Tiruppur garment exporters expect US-bound shipments to double to Rs 30,000 crore within three years following the India-US interim trade deal.
- The deal could create up to 5 lakh new jobs in the textile and garment sector in the Tiruppur cluster.
- The India-US trade agreement reduced US tariffs on Indian goods from 25% to 18%, with textiles and apparel being among the key beneficiary sectors.
- Orders previously diverted to competitor countries (Bangladesh, Vietnam) are expected to shift back to India.
Static Topic Bridges
India's Textile and Apparel Export Ecosystem
India's textile and apparel industry is the second-largest employer after agriculture, providing direct employment to approximately 4.5 crore people. Tiruppur in Tamil Nadu is India's largest knitwear export cluster, accounting for over 50% of India's total knitwear exports. The industry operates across the entire value chain — from fibre production (cotton, synthetic) to spinning, weaving, processing, and garmenting. India's textile exports totalled approximately USD 35-37 billion in FY25.
- Textile sector employment: ~4.5 crore (direct)
- India's share in global textile exports: approximately 4-5%
- Tiruppur: India's largest knitwear hub, ~50% of total knitwear exports
- Key textile export products: cotton yarn, readymade garments, home textiles, technical textiles
- Major export destinations: US, EU, UK, Bangladesh, UAE
- Government schemes: PM MITRA parks (7 mega textile parks), PLI scheme for textiles
Connection to this news: The 18% reciprocal tariff under the trade deal improves Tiruppur's cost competitiveness against Bangladesh (which enjoys duty-free access to many markets under LDC preferences) and Vietnam (which has FTAs with the US under CPTPP consideration), potentially redirecting orders to Indian manufacturers.
India-US Trade Deal: Interim Agreement Framework
The India-US Interim Trade Agreement announced on 6-7 February 2026 established a framework for phased tariff reductions. The US reduced its reciprocal tariff on Indian goods from 25% to 18%. India committed to reducing tariffs on US industrial goods, agricultural products, and addressing non-tariff barriers in medical devices and ICT goods. Labour-intensive sectors — textiles, gems, leather, agricultural goods, seafood, pharmaceuticals, electronics, and chemicals — are expected to be the primary beneficiaries.
- US tariff on Indian goods: reduced from 25% to 18%
- Key Indian export sectors covered: textiles, gems, leather, agricultural goods, seafood, pharma, electronics, chemicals
- India's commitments: tariff cuts on US agricultural products (DDGs, sorghum, tree nuts, soybean oil)
- Additional US concessions possible: removal of tariffs on generic pharmaceuticals, precious gems if interim deal succeeds
- India-US bilateral trade: approximately USD 200 billion annually
Connection to this news: The garment sector stands to benefit disproportionately from the tariff reduction because textiles are labour-intensive products where even small tariff differences significantly affect sourcing decisions by global buyers.
Employment Elasticity in Labour-Intensive Manufacturing
Employment elasticity measures the responsiveness of employment generation to output growth. In India, labour-intensive manufacturing sectors like textiles, leather, and food processing have historically shown higher employment elasticity (0.3-0.5) compared to capital-intensive sectors like petrochemicals or metals (0.1-0.2). The government's focus on boosting textile exports is directly linked to employment generation objectives, as each Rs 1 crore of textile exports creates approximately 15-20 direct jobs.
- Textile sector employment elasticity: approximately 0.3-0.5
- Job creation per Rs 1 crore textile exports: ~15-20 direct jobs
- Total labour force in textiles: ~4.5 crore (second only to agriculture)
- Government initiatives: PM MITRA parks, PLI scheme (Rs 10,683 crore for textiles)
- National Textile Policy aims to increase textile exports to USD 100 billion by 2030
Connection to this news: The projected 5 lakh job creation from doubling Tiruppur exports is consistent with the textile sector's high employment elasticity. At Rs 30,000 crore (approximately USD 3.5 billion) additional exports, the job creation potential is significant for a sector that employs predominantly semi-skilled and low-skilled workers.
Key Facts & Data
- Tiruppur garment export target: Rs 30,000 crore in 3 years (doubling current levels)
- Expected job creation: 5 lakh new jobs
- US tariff on Indian goods: reduced from 25% to 18%
- Textile sector employment: ~4.5 crore people
- India's textile exports: approximately USD 35-37 billion (FY25)
- Tiruppur's share in India's knitwear exports: ~50%
- PM MITRA textile parks: 7 mega parks announced