What Happened
- India's ready-made garment (RMG) exports rose 2.4% year-on-year to approximately $12 billion during April–December 2025 (first nine months of FY2025-26).
- Exports to the US fell 3% to $3.6 billion from $3.7 billion a year earlier, as American buyers deferred orders amid tariff uncertainty; however, a US tariff reset has placed India and China on a more level playing field by applying a 15% uniform tariff.
- Previously, Indian garment exporters effectively faced duties of around 25%, while China faced higher punitive tariffs — the new uniform 15% tariff narrows China's earlier disadvantage, intensifying competition.
- Japan recorded the strongest expansion at 30% growth during April–December, while Saudi Arabia (+18.5%) and Italy (+16%) also saw sharp increases — signalling market diversification.
- Both Vietnam and China benefit from vertically integrated supply chains, enabling more competitive pricing than India's fragmented textile-garment value chain.
- The FICCI-led industry body calls for accelerated implementation of trade agreements and PLI scheme benefits to maintain export competitiveness.
Static Topic Bridges
India's Textile and Garment Export Policy Architecture
India's textile and garment sector is one of the country's largest employers, providing direct and indirect employment to approximately 45 million people. The government has deployed a layered policy architecture to boost exports, centred on three schemes: PLI for Textiles, PM MITRA Parks, and the RoSCTL scheme.
- PLI Scheme for Textiles (notified September 2021): Outlay of ₹10,683 crore; targets man-made fibre (MMF) apparel, technical textiles; incentive of 4%–6% on incremental sales over the base year. Currently extended to include the garments sector.
- PM MITRA Parks (PM Mega Integrated Textile Region and Apparel): Budget of ₹4,445 crore (2021-22 to 2027-28); 7 parks sanctioned across Gujarat, Maharashtra, Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Telangana — aiming to create integrated value-chain hubs.
- RoSCTL Scheme (Rebate of State and Central Taxes and Levies, approved March 2019): Rebates all embedded state and central taxes/levies on export of apparel/garments and made-ups to enhance competitiveness.
- India has signed 14 Free Trade Agreements (FTAs) including with UAE, Australia, and EFTA countries; an India-UK FTA remains under negotiation and is expected to significantly boost textile exports.
Connection to this news: The 2.4% export growth, while positive, reflects the structural challenge India faces — PLI and PM MITRA are designed to address the missing vertical integration that currently limits India's ability to compete with China and Vietnam at scale and cost.
US Tariff Policy and India-China Trade Competition
The US has used tariff policy — including the Section 232 (national security) and Section 301 (unfair trade practices) mechanisms — as a strategic trade tool. The Trump-era and post-Trump administrations have maintained elevated tariffs on Chinese goods, creating periodic windows of opportunity for alternative suppliers. However, a tariff reset applying a more uniform rate compresses this differential.
- Under earlier tariff regimes, China faced 25%+ duties on many garment categories under Section 301, while India faced standard MFN tariffs (around 12–32% depending on product category).
- The 15% uniform tariff cited in the article reduces China's relative disadvantage and requires India to compete on supply chain efficiency, lead times, and quality rather than tariff arbitrage.
- Bangladesh and Vietnam — both major RMG exporters — also benefit from any tariff normalisation, intensifying multi-country competition.
- The US is India's largest single-country export destination for garments (approximately 27–30% of total RMG exports).
Connection to this news: The tariff reset effectively ends the "China-plus-one" tariff advantage India had in the US market, making it critical for Indian exporters to build structural competitiveness through the PLI and PM MITRA frameworks rather than relying on relative tariff differentials.
Global Value Chains and India's Textile Sector Competitiveness
A key structural weakness in India's RMG sector is the lack of backward integration — India imports significant quantities of man-made fibre (MMF) inputs and lacks the scale of polyester/nylon production that makes China and Vietnam price-competitive. The concept of Global Value Chains (GVCs) — where different stages of production are distributed across countries — is central to understanding India's export limitations.
- India's textile sector is predominantly cotton-based; China and Vietnam dominate MMF-based apparel (which accounts for ~70% of global garment trade).
- The PLI Scheme for Textiles specifically targets MMF products to correct this skew.
- China's vertically integrated model — from fibre to finished garment — enables 30–40% shorter lead times than India's fragmented supply chain.
- India's Share of global apparel exports: approximately 3.5% (compared to China's ~32%); Bangladesh ~6.5%; Vietnam ~5%.
- Diversification to Japan, Saudi Arabia, and Italy indicates growing success in premium/non-US markets.
Connection to this news: The April–December data showing strong growth in Japan and the Middle East while the US declines reflects a deliberate market diversification strategy — a resilience buffer against US tariff volatility and a recognition that India cannot match China's cost structure on synthetic garments in the short term.
Key Facts & Data
- India RMG exports: $12 billion (Apr–Dec 2025), up 2.4% YoY.
- US exports: $3.6 billion, down 3% YoY.
- New US tariff rate applied uniformly: 15% (previously ~25% effective rate for India).
- Japan exports: Up 30% (Apr–Dec 2025); Saudi Arabia: +18.5%; Italy: +16%.
- PLI for Textiles outlay: ₹10,683 crore; PM MITRA Parks: ₹4,445 crore.
- India's share of global apparel exports: approximately 3.5%.
- Textile and garment sector employment: approximately 45 million (direct and indirect).