India’s garments exports — that have stagnated in the $16-18 billion range over the last 10 years — now face an additional threat. Effective August 1, the Trump administration has more than doubled the tariff on Indian exports to 25%, with a threat of an additional penalty. Major apparel supplier Vietnam, on the other hand, recently secured a last-minute deal to cap US tariffs at 20% on many of its exports — giving it further advantage against India — while Bangladesh, another major competitor, is looking to secure a similar deal as Vietnam in the next few days.

The US imported almost $85 billion worth of garments in 2024, of which India accounted for about $10.5 billion. While the latest tariff announcement can be seen as a setback, India still has three aces up its sleeve to neutralise its impact and push firmly towards its $100 billion textile exports target. These aces are concluding the free trade agreement (FTA) with the EU, ensuring the supply of raw material at competitive prices, and an incentive and reforms package tailored for employment generation through apparel exports.

The first ace India must play is to expedite the FTA with the EU. Currently, the EU is the largest garments importer with an import value close to $200 billion. India only captures $5 billion of this against Bangladesh’s $25 billion. The primary reason is........

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