Indian Textile Industry Seeks Govt Support Amidst Falling Exports and US Tariffs

Textile

Updated on 03 Nov 2025, 08:40 am

Reviewed By

Aditi Singh | Whalesbook News Team

Short Description :

India's textile and garments industry has requested significant government intervention, including tax concessions, depreciation allowances, and interest subvention, in the upcoming budget. This plea comes as the sector faces a sharp decline in exports, primarily due to increased US tariffs that put Indian products at a disadvantage compared to competitors like Vietnam and Bangladesh. The industry warns of severe impacts on employment and growth projections if relief measures are not implemented.

Indian Textile Industry Seeks Govt Support Amidst Falling Exports and US Tariffs

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Detailed Coverage :

The Indian textile and garments industry, a vital sector employing over 45 million people and projected to reach $350 billion by 2030, is facing severe challenges. Representatives have met with the Textiles Secretary to submit pre-budget recommendations for fiscal year 2026-27. The primary concern is the impact of a 50% US tariff imposed in August, which is significantly higher than the 19-20% tariffs faced by competing nations like Vietnam and Bangladesh. This has led to a sharp drop in exports, with overall textile and apparel exports falling by 37% between May and September 2025. Garments alone saw a 44% decline.

To counter this, the industry is demanding several measures. Key among these are the reintroduction of the interest equalisation scheme for export credit, which expired in December 2024, and concessional tax rates of 15% for new manufacturing units. They are also seeking accelerated depreciation allowance of 100% over two years for capital assets to improve liquidity and encourage reinvestment in modernization and technology.

Furthermore, the industry wants duty-free import of trims and accessories under IGCR rules to be extended to intermediate suppliers and deemed exporters, along with an allowance for minimum wastage. The Apparel Export Promotion Council (AEPC) emphasizes that these reliefs are crucial for the MSME segment to compete globally.

Impact: This news can significantly impact the Indian stock market, particularly listed companies in the textile and apparel sectors, as government policy decisions on tax, subsidies, and import duties can directly affect their profitability and competitiveness. The sector's health is also closely tied to employment and overall economic growth. Impact Rating: 7/10

Difficult Terms: US Tariffs: Taxes imposed by the United States on imported goods, intended to protect domestic industries or as a form of economic leverage. Depreciation Allowance: A tax deduction that a business can claim for the decrease in the value of its assets over time due to wear and tear or obsolescence. Interest Subvention: A government subsidy that reduces the interest rate on loans, making borrowing cheaper for specific sectors or entities. MSME: Micro, Small, and Medium Enterprises. These are small businesses that are crucial for employment and economic development. IGCR (Import of Goods at Concessional Rates of Duty) Rules: A provision that allows certain goods to be imported without paying full customs duty, typically for specific manufacturing or export purposes. Deemed Exports: Transactions in which the goods are delivered within India, but are considered exports based on certain criteria, often related to payment in foreign exchange or specific end-use requirements.