US sanctions law could hit India's textile exports with new tariffs, warns CITI
The Indian textile and apparel industry is facing a significant threat from potential new United States tariffs. These measures could follow the signing of the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, a move that has sparked deep concern among domestic manufacturers.
According to the Confederation of Indian Textile Industry (CITI), the United States serves as the single-largest market for India’s textile and apparel exports. This reliance makes the entire sector exceptionally vulnerable to any sudden changes in American trade policy or additional taxation.
Impact on MSMEs and the US Market
CITI Chairman Ashwin Chandran has expressed serious concerns regarding the ability of Indian businesses to withstand these potential costs. He noted that the sector is already struggling due to various global stressors, including the ongoing turmoil in West Asia.
The industry is largely composed of Micro, Small, and Medium Enterprises (MSMEs), which operate on thin margins. Chandran warned that any additional tariffs under the new Act will be very difficult for these MSMEs to absorb, potentially crippling their ability to compete in the American market.
The Need for Bilateral Trade Agreements
To protect domestic exporters, CITI is urging the Indian government to engage urgently with Washington. The goal is to ensure that Indian exporters are not unfairly disadvantaged or rendered uncompetitive within the United States.
Chandran highlighted that a fair, balanced, and equitable bilateral trade agreement between India and the US is now an urgent necessity. While India is currently negotiating various free trade agreements (FTAs) to open new markets, CITI emphasizes that these cannot replace the importance of the US market. The benefits from FTAs are not automatic and will take significant time to materialize for exporters.
Recent Export Trends and Economic Data
Recent data highlights the volatility currently facing the sector. In August 2026, India’s overall textile and apparel exports saw a rise of 6.39 per cent when measured in US dollar terms compared to the same period last year. However, the growth was unevenly distributed:
- Textile exports increased by 13.03 per cent.
- Apparel exports declined by 2.74 per cent.
Looking at the broader period from April to August 2026, the situation remains challenging. During these months, textile exports grew by 6.94 per cent, but apparel exports saw a significant drop of 9.10 per cent. This resulted in cumulative textile and apparel exports being marginally lower by 0.24 per cent year-on-year.
Future Potential for India-US Trade
Despite the current challenges, CITI believes the India-US trade relationship holds immense potential. The organization sees opportunities for technology partnerships, increased supply-chain resilience, and greater complementarities within the value chain.
A balanced and predictable trade framework is essential to strengthen commercial engagement. Such stability would help support the long-term competitiveness of the textile and apparel sectors in both India and the United States.