The Indian textile and apparel sector has entered a high-stakes transition period this February following the formalization of the India-US Interim Trade Agreement. By reducing reciprocal tariffs from a punitive 50 per cent to a more sustainable 18 per cent, Washington has significantly altered the competitive math for global sourcing. While regional rivals like Bangladesh and Vietnam operate under 20 per cent duties, and China faces a steep 34 per cent barrier, Indian manufacturers are witnessing an immediate revival of stalled orders. Industry veteran Rajeev Gupta, Joint Managing Director, RSWM, confirms, this 32-percentage-point reduction provides a decisive cost advantage, particularly as the US accounts for nearly 28 per cent of India's total textile exports.
Legislative disruption and the small-parcel shift
This tariff relief arrives as a critical counterweight to the structural ‘de minimis’ disruption. The US House of Representatives is currently debating a new bill to partially restore simplified customs treatment for low-value parcels after the total removal of the Section 321 exemption in late 2025. This regulatory volatility has forced large-scale players to abandon high-burn direct-to-consumer models. A notable case is Trident Ltd, which recently divested its digital retail arm, mytrident.com, to focus on industrial scaling. This move aligns with the Union Budget 2026–27 focus on mega textile parks, allowing companies to consolidate production in "plug-and-play" facilities to offset the 44.7 per cent contraction in net profits reported during the high-tariff Q3 FY26 period.
Vertical integration as a hedge against volatility
To secure long-term margins, exporters are doubling down on vertical integration and the National Fiber Scheme. By sourcing up to 55 per cent of yarn internally, companies like Trident are better positioned to navigate the ‘softer’ global cotton outlook and rising logistics costs. The government’s PM MITRA parks and modernized skilling programs aim to sustain the livelihoods of 4.5 crore textile workers while positioning India as the primary, resilient alternative to non-market economies. As standard ad valorem duties replace flat fees for postal shipments by late February, the industry's shift toward large-scale, high-value brand partnerships is no longer optional - it is the baseline for survival.
A leading vertically integrated manufacturer of yarn, home textiles, and eco-friendly paper, Trident is a dominant supplier to major US retailers including Walmart and IKEA. The group is currently executing a Rs 3,000 crore capacity expansion to capitalize on new trade deals. Despite recent profit dips, its 9-month FY26 performance remains resilient with a 16 per cent Y-o-Y profit increase.
