Whalesbook
US Tariff Headwinds Slow Export Growth
India's textile and readymade garment (RMG) exports to the United States are experiencing a significant slowdown, primarily attributed to ongoing U.S. tariffs. This deceleration was evident with RMG export growth recorded at a mere 2.89% in December 2025, reflecting broader challenges from inflationary pressures and geopolitical uncertainties in key international markets.
FTA Opportunities Brighten Outlook
Despite these headwinds, the Indian apparel industry is pinning its hopes on major Free Trade Agreements (FTAs) for a substantial uplift. The anticipated conclusion of an India-EU FTA within the fortnight and the imminent implementation of the India-UK FTA are viewed as critical developments. These pacts are expected to grant Indian apparel exporters a considerable edge in market access to these developed economies.
Market Access Gains
The European Union holds approximately 20% of India's apparel export market, making it the second-largest destination. The United Kingdom, a significant player, accounts for about 6% of exports. Combined with the U.S. market's 29% share, these trade agreements promise to solidify and expand India's presence in these crucial export destinations.
Industry Optimism and Support
A. Sakthivel, Chairman of the Apparel Export Promotion Council (AEPC), expressed cautious optimism about the sector's growth prospects. He cited expectations of gradual global demand improvement and highlighted India's strengths in supply chain reliability, compliance standards, and growing design capabilities. Sakthivel also lauded the government's recent support measures, including the Interest Subvention Scheme and credit guarantee support for MSME working capital loans, aimed at bolstering the industry's competitiveness.