How US Tariff Cut Opens New Momentum for India’s Manufacturing Story
By Abhishek Sharma, CEO & CO-Founder at Fashinza
India’s integration into global supply chains is entering a defining phase, shaped by both structural shifts in sourcing and evolving trade alignments. As global buyers actively diversify away from concentrated supply bases, policy signals from large consuming markets are becoming critical enablers. In this context, US President Donald Trump’s announcement of a sharp reduction in tariffs on Indian exports from 50% to 18% marks a potentially pivotal moment. The near two-thirds cut in duties materially improves India’s cost competitiveness, strengthening its case as a preferred manufacturing and sourcing partner for American buyers at a time when global supply chains are being strategically reconfigured.
For US brands, tariffs rank among the most significant cost drivers after manufacturing. A reduction of this magnitude can translate into a 20–25% drop in landed costs, depending on the category. In an environment marked by sustained pricing pressure and tight margins, this shift materially changes the competitiveness equation enabling Indian suppliers to compete not only on capability, but on cost parity and, in some cases, cost advantage.
The impact is further amplified by the strategic weight of the US market. Accounting for approximately 18–20% of India’s total exports, the United States remains India’s largest export destination. Any sustained easing of trade barriers therefore has direct implications for export volumes, factory utilisation, and the depth and durability of long-term sourcing partnerships.
Apparel and Consumer Goods: Early Beneficiaries
Apparel is likely to be among the first sectors to feel the impact. India currently exports an estimated $8–9 billion worth of apparel to the US annually. Even incremental demand growth, driven purely by improved cost economics, could unlock significant upside in export value.
More importantly, lower tariffs introduce predictability, an essential but often undervalued driver of sourcing decisions. Elevated or uncertain tariffs tend to push brands toward cautious, short-term ordering patterns. A more stable cost environment enables buyers to plan across seasons, commit to larger order volumes, and build longer-term partnerships. For manufacturers, this translates into better capacity planning, higher asset utilisation, and the ability to invest in quality, compliance, and workforce productivity.
Beyond apparel, similar dynamics are likely to play out across home textiles, footwear, and other consumer goods segments where India already has manufacturing depth but has historically faced cost headwinds in the US market.
A Strategic Opening for India
This tariff reset arrives at a critical juncture. Global brands are actively diversifying supply chains to reduce concentration risk, and India has long been positioned as a natural beneficiary of this shift. However, elevated tariffs have often blunted its cost competitiveness, limiting the pace at which sourcing volumes could scale.
While lower tariffs remove a key external friction, policy tailwinds alone will not determine outcomes. As volumes increase, buyer expectations will continue to rise—around execution consistency, speed-to-market, compliance rigor, and operational reliability. The suppliers and platforms that can deliver on these parameters will be best placed to convert opportunity into sustained share.
What Will Determine Long-Term Impact
While the immediate benefits of lower tariffs are evident, the long-term impact will hinge on how effectively the ecosystem responds to rising demand. As sourcing economics improve, buyers are likely to consolidate volumes rather than spread risk across multiple small suppliers. This will favour manufacturers and platforms that can demonstrate scale, consistency, and operational discipline.
Equally important will be execution speed and reliability. Shorter lead times, predictable delivery schedules, and adherence to global compliance standards will increasingly shape sourcing decisions, particularly as brands seek to balance cost efficiency with resilience. The ability to integrate design, production, and logistics in a coordinated manner will emerge as a key differentiator.
Finally, transparency across the supply chain—from pricing and production status to sustainability and labour practices will play a growing role in buyer confidence. As India attracts larger and longer-term sourcing commitments, these factors will determine whether tariff relief translates into sustained competitive advantage or remains a short-lived cost benefit.
Looking Ahead
Indian manufacturers are entering this phase better prepared than in previous cycles, with stronger compliance frameworks, deeper supplier ecosystems, and rising adoption of technology across the value chain. At the same time, global brands face growing pressure to build supply chains that are not only cost-efficient, but resilient and diversified.