TCF Post Analysis
India’s apparel export sector experienced a significant decline during both the month of May 2026 and the cumulative period of April–May 2026, marking the first two months of the Indian fiscal year.
In May, apparel exports fell to US$ 1,297.23 million, representing a 14.17% decline compared to the same month last year. Cumulative apparel exports for April–May 2026 reached US$ 2,508.70 million, a 12.98% decline compared to the same period in the previous year.
Over the last couple of years, the Indian government has increased efforts to expand apparel production and secure a larger share of the global market. However, while India’s “All Commodities” exports grew by 16.09% during the April–May period, the apparel sector declined. Furthermore, the share of apparel in total merchandise exports fell to 2.82% this year, down from 3.76% during the same period last year.
Comparison with Textile Raw Material Imports
The performance of apparel exports stands in contrast to the trend in raw material imports, which saw substantial growth. In May, imports of raw cotton and cotton waste grew by 43.18%, compared to a 20.55% growth rate during the same month last year.
Key Factors and Possibilities
- Production vs. Output: While the government has exempted duties on cotton imports, the surge in “Cotton Raw & Waste” imports reflects the industry’s attempt to fulfill production requirements. The decline in apparel shipments in May indicates that more time is needed to translate government support into export growth.
- Shift in Sourcing: Several months ago, many US and EU buyers shifted their sourcing to countries like Vietnam, Bangladesh, Indonesia, and Cambodia to mitigate risks associated with high tariffs on Indian goods. Indian exporters have yet to recover those lost accounts.
- Global Demand: The decline in apparel exports is not solely a supply-side issue; it is also driven by weak global demand, particularly in the US and EU markets.
Trade Negotiations with the US
While Indian government statistics show that the cumulative value of total merchandise exports during April–May 2026 reached US$ 88.91 billion—a 16.09% increase from US$ 76.59 billion during the same period last year—goods exports to the USA remained flat at US$ 17.29 billion, compared to US$ 17.21 billion a year earlier.
New Delhi is seeking a trade deal with the United States to secure preferential tariff access. However, these efforts face complications following the U.S. Administration’s recent imposition of fresh tariffs on 60 trade partners, including India, citing “unfair foreign trade practices.”
India remains hopeful for smoother and greater access to the US market. U.S. Trade Representative Jamieson Greer is scheduled to visit India from June 23 to 24 for further talks regarding an interim trade agreement.
“Discussions with the USTR will be centered around giving final touches to our interim deal,” India’s Trade Secretary Rajesh Agrawal told reporters this week. He added that New Delhi would seek clear answers regarding the USTR’s proposed new tariffs under a Section 301 probe while finalizing the pact.
