India's vital textile and apparel industry is facing significant concern over potential additional tariffs from the United States. Following the signing of the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, industry body the Confederation of Indian Textile Industry (CITI) has called for immediate engagement from the Indian government with the US to safeguard exporters, especially micro, small, and medium enterprises (MSMEs).
New US Tariffs Could Cripple Indian Exporters
CITI warns that any new tariffs imposed under this legislation would be extremely difficult for the Indian textile and apparel sector to absorb. Ashwin Chandran, Chairman of CITI, stated that the industry, which is predominantly MSME-driven, is already under stress from various factors, including ongoing geopolitical turmoil in West Asia. The United States remains the largest market for India's textile and apparel exports, making any disruption to this trade highly impactful.
Higher tariffs would directly undermine the competitiveness of Indian exporters in the critical US market, potentially leading to substantial losses and affecting livelihoods across the sector.
FTAs Offer Hope, But US Market Remains Paramount
While India is actively pursuing and implementing new free trade agreements (FTAs), CITI emphasizes that these cannot immediately replace the strategic importance of the US market. The India-UK Comprehensive Economic and Trade Agreement (CETA) became effective in July 2026, and an India-EU FTA is anticipated to become operational in 2027. However, industry leaders note that the benefits from these agreements will take time to materialize and cannot compensate for immediate challenges in the US.
Mixed Export Performance Adds to Pressure
Recent export figures highlight the industry's delicate position. In August 2026, India's overall textile and apparel exports saw a 6.39% year-on-year increase in US dollar terms. This was driven by a 13.03% rise in textile exports, though apparel exports declined by 2.74%. For the April-August 2026 period, cumulative textile and apparel exports were marginally down by 0.24% year-on-year, with textile exports growing 6.94% but apparel shipments falling 9.10%.
Understanding the Sanctions Legislation
The Lindsey O. Graham Act primarily targets Russia's energy and defense sectors, along with senior Russian officials. A key provision mandates tariffs of up to 100% on goods imported from countries that are among the top five largest buyers of Russian crude oil or gas, or those that knowingly make new purchases or assist Russia in evading sanctions. Given that both India and China are significant buyers of Russian oil, Indian exports to the US could be at risk.
However, the law does not explicitly name specific countries or provide a clear methodology for determining the top-five lists, granting the US administration considerable discretion. Analysts suggest that Washington might be hesitant to impose measures that could inflate US consumer and energy prices, especially ahead of the November midterm elections, leaving the immediate impact on India uncertain.
CITI advocates for greater engagement between the two governments to establish a fair, balanced, and equitable bilateral trade agreement, fostering greater value-chain integration, technology partnerships, and supply-chain resilience for long-term competitiveness in both nations.