Reciprocal Tariff Could Be Favorable For India’s Textile Sector — Read Systematix' Analysis

While many Asian exporters face challenges, this is a unique opportunity for India to strengthen its position in the global trade. The differential gives India a competitive edge, positioning it as an attractive sourcing destination for US apparel brands like GAP and Walmart, which currently rely on higher-tariff countries..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Report.On April 02, 2025, US President, Donald Trump, announced reciprocal tariffs, aiming to equalize the tariff rates that US faces from its trading partners. Under this policy, Indian exports to the US now face a tariff of 27%. Although steep, it is still lower than that imposed on key competitors in the textiles and apparel sector, such as Vietnam (46%), Cambodia (49%), China (34%+20% previously announced), Bangladesh (37%), and Pakistan (29%). We expect the tariff hike to disrupt global supply chains, raise costs and prompt companies to diversify sourcing. While many Asian exporters face challenges, this is a unique opportunity for India to strengthen its position in the global trade. The differential gives India a competitive edge, positioning it as an attractive sourcing destination for US apparel brands like GAP and Walmart, which currently rely on higher-tariff countries. For example, shifting production from Bangladesh (37% tariff) to India (27%) could yield significant cost savings for the US-based companies..We believe India could sustain and enhance its market positioning in world trade by focusing on-negotiating tariff reductions through bilateral trade agreements, exploring alternative markets to reduce over-reliance on the US,strategic policy shifts such as zero-duty cotton imports, etc. On the flip side, higher tariffs could potentially dampen US consumer demand as a huge portion of the tariff costs may get passed on to the end consumer, resulting in apparel prices turning costlier. US companies may also ask Indian suppliers to partly absorb the higher costs, which would squeeze their margins, pushing them to focus on cost-cutting measures. Additionally, countries such as Turkey, Morocco, and Latin America, which have been spared from high tariffs, could emerge winners and attract shifts in apparel manufacturing. .Despite near term uncertainties, we are optimistic thatstrong demand visibility, supported by normalizing channel inventories at the global retailer level, comparatively lower tariffs, rising labor costs in Vietnam, ongoing political instability in Bangladesh,India’s strong production base, andgovernment support would cumulatively drive long-term growth in India’s textile industry..Click on the attachment to read the full report:.IT Sector Q4 Results Preview: Subdued Growth Amid Weak Global Macros, Tight Spends — Systematix.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Reciprocal Tariff Could Be Favorable For India’s Textile Sector — Read Systematix' Analysis

Despite near term uncertainties, the brokerage is optimistic that strong demand visibility, comparatively lower tariffs, rising labor costs in Vietnam, strong production base, government support.

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Reciprocal Tariff Could Be Favorable For India’s Textile Sector — Read Systematix' Analysis

Despite near term uncertainties, the brokerage is optimistic that strong demand visibility, comparatively lower tariffs, rising labor costs in Vietnam, strong production base, government support.

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