America has imposed a 50% tax on Indian goods, but it could increase tenfold. American Senator Lindsey Graham said on Wednesday that President Donald Trump has approved a bill to impose a 500% tax on countries purchasing oil from Russia. This includes India, China, and Brazil. According to ET's report, this could particularly harm India's textile industry significantly. Indian companies have started production in America for the autumn and winter seasons. However, the threat of a 500% tax could certainly derail them.
Chairman of the Cotton Textiles Export Promotion Council, Vijay Agarwal said, “Buyers who were previously considering sending some orders to India are now not ready to come. They have started writing to us, asking what will happen if this 500% tax is imposed and who will guarantee it.” This industry is already under pressure. Last August, the US imposed a 50% tax on India. This led to significant concessions, turning to domestic brands, and rerouting export orders from neighboring countries.
Export in America
In the financial year 2024-25, India exported textiles and garments worth 37 billion dollars, of which 28-30% went to America. Since America imposed a 50% tax on Indian goods, the industry is struggling to survive. According to the Indian Textile Industry Association, during April-November 2025, textile exports increased by 2.28%, while garment exports decreased by 2.27%.
“The situation regarding America's tax increase is very uncertain. But we have to produce goods. We have to take risks,” said Agarwal. About 8,000 people work at Rajlakshmi Cotton Mills in Kolkata. The company's MD Rajat Jaypuria said, “We offered large discounts to continue exports, hoping this issue will be resolved soon. We have now started production for autumn orders. However, a 500% tax would effectively be a ban. If exports to America are stopped, we don't understand how the factory will run.”
For the autumn season, American buyers are already looking for alternatives to Indian exporters. Industry officials say that signs of stress are already visible in Tirupur, which exports almost 90% of India's knitwear exports.
Which sectors will be most affected?
IT and Tech Sector – The IT sector in India is heavily dependent on the US. Major IT companies derive a significant portion of their revenue from the American market. Due to increasing tariffs and trade tensions, American companies may reduce spending on Indian IT services. This will impact new hiring and increase the risk of job cuts.
Textiles and Garments – A large portion of India's textiles and ready-made garments are exported to the US. If higher taxes are imposed on these products, Indian products will become more expensive. This may lead American buyers to turn to other countries. This will have a direct impact on factories and the millions of workers employed there.
Pharma Sector – India is known as the pharmacy of the world, and the US is the largest market for Indian medicines. With increased tariffs, the prices of Indian medicines will rise, potentially reducing exports. This could affect the revenue of pharmaceutical companies and jobs.
Auto and Auto Parts – Auto parts and vehicle components are exported from India to the US. If tariffs increase, their exports may decrease, leading to a potential employment crisis in this sector as well.