The US administration under President Donald Trump has announced that an additional 25% tariff on Indian goods will take effect from tomorrow (August 27, 2025), bringing total duties on Indian exports to 50%, among the highest globally.
Indian textiles, a major export sector, are expected to bear a significant share of this burden, according to Indian news reports.
According to CRISIL, the removal of trade preferences under the Generalized System of Preferences (GSP) will heavily impact textiles, which form a substantial part of India’s US-bound exports.
Small and medium enterprises (SMEs), which dominate the sector with over 70% market share, are particularly vulnerable to the higher duties.
The ready-made garments (RMG) segment, concentrated in Tirupur, is expected to face severe setbacks, as over 30% of its RMG exports go to the US.
The additional 50% tariff, effectively raising total duties to 61% including ad valorem charges, will significantly erode the competitiveness of Indian garments compared with peers in Bangladesh and Vietnam, where tariffs remain at 31%.
While export volumes may decline, CRISIL (Credit Rating Information Services of India Limited) notes that growth in the domestic market could partially offset the losses. However, SMEs in the textile industry are likely to face margin compression and challenges in maintaining global price competitiveness, particularly in readymade garments and apparel exports.
Pushan Sharma, Director at CRISIL Intelligence, said that partial absorption of increased product prices due to higher tariffs will put tremendous pressure on SMEs, especially in Tirupur, threatening the sustainability of US-bound textile exports.
The steep tariff increase underscores the urgency for Indian textile exporters to diversify their international markets and strengthen domestic production chains to mitigate the impact of these US trade measures.
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