The Indian Ready-Made Garment (RMG) sector has entered a high-stakes period of advocacy as the Apparel Export Promotion Council (AEPC) submitted its formal wishlist for the Union Budget 2026-27. At the heart of the appeal is a request for a dedicated Focus Market Scheme (FMS) for the United States. Following the imposition of a cumulative 50 per cent tariff on Indian textiles by Washington in August 2025 - comprising reciprocal and ad valorem duties - exporters are struggling to maintain a foothold in their largest market, which traditionally accounts for 28 per cent of India's apparel shipments.
Offsetting competitive erosion and credit strain
To counter the ‘tariff wall,’ Dr A Sakthivel, Chairman, AEPC has proposed the issuance of freely transferable incentive scrips equivalent to 20 per cent of the Free On Board (FOB) value for US-bound exports. This intervention is designed to protect margins that have compressed to near-zero levels as manufacturers absorb costs to prevent order diversion to rivals like Vietnam and Bangladesh, who currently face significantly lower US duties of approximately 20 per cent. Additionally, the council is lobbying for a hike in interest subvention to 5 per cent for MSMEs, citing a 30% surge in working capital requirements due to extended credit cycles.
Incentivizing modernization and ESG compliance
The industry is also prioritizing long-term structural shifts to mitigate natural fiber volatility and meet strict EU sustainability norms. Demands include a 100 per cent accelerated depreciation on capital assets over two years and the creation of a Green Transformation Fund providing 5 per cent soft loans for eco-friendly infrastructure. With domestic cotton yields projected to hit a two-decade low, these measures aim to transition the sector toward high-value Man-Made Fiber (MMF) products and technical textiles, ensuring the industry stays on track to reach its $350 billion valuation target by 2030.
The AEPC is the official body facilitating Indian garment exports globally, representing over 8,000 member exporters. It focuses on market diversification across 111 countries and technology upgradation for MSMEs. Strategically, the council aims to expand India’s MMF footprint and achieve a $37 billion export milestone by leveraging new Free Trade Agreements (FTAs).
