India: US Tariff Cut to 18% Lifts Apparel Export Outlook to Stable

ICRA said the cut in US reciprocal tariffs to 18% from 25%, along with removal of the additional 25% ad valorem duty (Aug 2025), led to revising the apparel export sector outlook to ‘Stable’ from ‘Negative’.

India’s apparel exports stood at $16 billion in FY25, with the US accounting for nearly one-third of shipments.

Export revenues are projected to decline 3–5% in FY26, before rebounding 8–11% in FY27.

Operating margins are expected to compress to 7.7% in FY26 but recover to around 9.5% in FY27, after shrinking nearly 200 basis points in recent quarters.

Easing tariff pressures and upcoming trade deals like the US-India pact and India-EU FTA (next year) are expected to support medium-term export growth.