Indian textile exporters lose edge as rivals get US quota exemptions

India remains one of the relative beneficiaries of the new US tariff regime overall, the report noted. It estimated India’s effective tariff rate in the US at around 12 per cent. That compares with Bangladesh at around 25 per cent, China at around 22 per cent, and Vietnam and Indonesia at around 14 per cent each. Nearly 55 per cent of India’s exports to the US will attract the additional 10 per cent tariff. The remaining 45 per cent are either exempt – including products such as generic pharmaceuticals and smartphones – or are already covered under separate Section 232 tariffs applicable to sectors like steel and aluminium, plus auto parts.

India’s exports to the US have already shown a marked recovery after the earlier IEEPA tariffs were struck down earlier this year, Emkay said. “India’s exports to the US saw a marked improvement after the IEEPA tariffs were ruled unlawful… India’s monthly exports to the US have averaged $8.4 billion in the four months since, vs $6.5 billion in the prior six months,” the report said.

The brokerage expects the new Section 301 tariffs to have only a limited impact on India’s overall export trajectory in the near term. The country’s relatively lower tariff rate could offer marginal benefits over some competing exporters. Emkay cautioned that further Section 301 investigations by the US into excess manufacturing capacity could result in additional tariffs on India. “In this context, ongoing negotiations on the India-US bilateral trade deal will be crucial to ensure a lower tariff rate and preferential access for Indian exports in the US market,” the report said.