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US Tariffs Weigh On India Apparel Exports, Recovery Expected In FY2027: ICRA

ICRA has reported muted growth in India’s apparel exports, which rose just 1.5% in US$ terms during 10M FY2026, impacted by US tariff pressures and demand slowdown. Export volumes to the US declined nearly 6%, while a weaker rupee supported 5.8% growth in INR terms.

India’s apparel exports, valued at around US$16 billion, account for nearly 3% of global trade estimated at US$550 billion. Europe and the US together contribute over 60% of demand. Global trade growth moderated to 2% to 3% in 2025 after a sharp 20% surge in 2021, reflecting volatility in sourcing cycles.

ICRA revised the sector outlook to Stable, citing tariff easing and potential FTAs with the UK and EU. Revenues are projected to grow 8% to 11% in FY2027, while margins may improve to 9.5%. Geopolitical risks in West Asia remain critical, as 8% export exposure to the region could disrupt supply chains and extend cash cycles.

ICRA revised the sector outlook to Stable, citing tariff easing and potential FTAs with the UK and EU. Revenues are projected to grow 8% to 11% in FY2027, while margins may improve to 9.5%. Geopolitical risks in West Asia remain critical, as 8% export exposure to the region could disrupt supply chains and extend cash cycles.

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