FW
Indian apparel and textile exporters are grappling with a "perfect storm" this week as the central government unexpectedly halved benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. The notification, issued by the Directorate General of Foreign Trade (DGFT) on February 23, 2026, slashes notified rates and value caps by 50% with immediate effect. This fiscal contraction arrives at a precarious moment: just days after the US trade landscape shifted from a 10% global surcharge to a more aggressive 15% tariff, leaving billions in existing order books vulnerable to sudden margin erosion.
Fiscal squeeze meets global protectionism
The move to rationalize RoDTEP benefits is a direct fallout of the FY27 Union Budget, which saw the scheme’s allocation plummet from ₹18,233 crore to just ₹10,000 crore. For the textile sector—a high-volume, low-margin industry—this isn’t just a policy adjustment; it’s a direct hit to price competitiveness.
Industry veterans warn that because RoDTEP is designed to neutralize domestic taxes that cannot be recovered otherwise, cutting these rates is equivalent to exporting Indian taxes to global markets. In a sector where a 1% cost difference can determine whether a contract stays in India or moves to Vietnam or Bangladesh, a 50% reduction in tax remission is a significant blow.
|
Indicator |
FY2025-26 (Actuals) |
FY2026-27 (Budgeted) |
% Change |
|
RoDTEP Allocation |
₹18,233 Crore |
₹10,000 Crore |
-45.15% |
|
Max RoDTEP Rate |
4.30% |
2.15% |
-50.00% |
|
Cotton Staple Cap |
₹1.60/kg |
₹0.80/kg |
-50.00% |
The 150-Day US tariff seesaw
Compounding the domestic subsidy cut is the erratic trade signals coming from Washington. Following a US Supreme Court ruling that struck down previous "emergency" tariffs, the Trump administration initially signaled a 10% global surcharge under Section 122 of the Trade Act of 1974. However, within 24 hours, that figure was revised upward to 15%, effective February 24, 2026.
While this 15% rate is currently the ceiling permitted under Section 122 for a 150-day window, the lack of a permanent bilateral deal leaves Indian goods in a "no-man's land" of pricing. The Global Trade Research Initiative (GTRI) notes that Indian exporters are currently rushing shipments to beat further escalations, yet they now find themselves doing so with significantly reduced domestic support.
Apparel hubs in the crosshairs
For apparel clusters in Tirupur, Noida, and Ludhiana, the timing is "deeply disturbing." Many exporters had already locked in prices for the upcoming spring-summer season based on previous RoDTEP rates. The "immediate effect" of the DGFT notification means that shipments currently at ports or in mid-production will no longer fetch the expected rebates.
According to data from the Confederation of Indian Textile Industry (CITI), combined textile and apparel exports already fell by 3.75% in January 2026 to $3.27 billion. This trend is expected to worsen as the effective tax burden rises.
Consider cas of a cotton exporter
A mid-sized cotton yarn exporter typically operates on a net margin of 3-4%. Previously, a RoDTEP rebate of 3% acted as their primary profit buffer, allowing them to price a unit at ₹97 instead of ₹100 to remain competitive against Vietnamese suppliers. With the rebate now slashed to 1.5%, their effective cost jumps to ₹98.5. In the high-volume US retail market, this 1.5% hike is often enough for a buyer to shift the entire seasonal contract to a duty-exempt competitor like Bangladesh.
The textile & apparel Sector outlook
The Indian textile and apparel industry remains the nation’s second-largest employer, specializing in cotton-based garments and home textiles. Key hubs like Tirupur dominate the US market, which accounts for nearly 30% of India's apparel exports. Despite a marginal 0.61% growth in overall merchandise exports in January 2026, the sector’s share in the total export basket slipped from 9.37% to 8.96%.
The immediate financial outlook is clouded by a widening trade deficit, reaching $34.68 billion in January. Ratings agency ICRA has recently revised the apparel export outlook to "Negative," forecasting a revenue shrink of 6-9% in FY27 if current tariff pressures and subsidy cuts persist. Historically a resilient pillar of Indian trade, the sector now faces a transition period where it must survive on thinner margins until a stable India-US trade framework is finalized.
A sudden restructuring of the global trade order occurred this week following a landmark US Supreme Court ruling that struck down previous ‘emergency’levies. In immediate retaliation, the Trump administration utilized Section 122 of the Trade Act of 1974 to implement a uniform 15 per cent global tariff on all imports. This maneuver effectively resets the apparel and textile landscape, creating a ‘zero-sum’ environment that favors low-cost manufacturing hubs while penalizing previous trade partners who held preferential status.
Competitive realignment in textile hubs
India and China have emerged as the primary beneficiaries of this administrative shift. Previously burdened by cumulative ‘reciprocal’ and punitive duties that reached as high as 50 per cent for Indian textiles and 54 per cent for Chinese goods, both nations now face a significantly reduced 15 per cent baseline. Market reaction was instantaneous; Indian textile giants like Trident and Welspun Living saw equity gains of up to 7.6 per cent, as analysts project an exponential rise in export volumes to the US under the more competitive pricing structure.
Erosion of European and British trade advantages
Conversely, the ‘leveling’ of tariffs has stripped the United Kingdom and the European Union of their hard-won trade advantages. Under prior bilateral agreements, UK-made apparel and EU luxury goods enjoyed preferential rates as low as 10 per cent. The new flat 15 per cent rate not only increases costs for British exporters but also threatens to ‘freeze’ the EU-US customs deal reached last summer. European Commission officials have responded with a ‘deal is a deal’ ultimatum, warning that any breach of agreed tariff ceilings could trigger retaliatory measures on American agricultural exports.
Global asset management and investment firm, Gordon Brothers has finalized the acquisition of the Chinese Laundry brand portfolio from CELS Brands. Announced in February 2026, the transaction includes the namesake label along with sister brands Dirty Laundry, CL by Laundry, and 42 Gold. This move transitions the Los Angeles-based footwear staple from a traditional retail operation into a brand-licensing and distribution platform.
Inventory liquidation and operational restructuring
As part of a comprehensive capital solution, Gordon Brothers is overseeing the orderly wind-down of Chinese Laundry’s physical retail presence. The firm is currently managing the disposition of approximately 1.5 million pairs of shoes, offering a significant bulk-inventory opportunity for third-party retailers. This tactical liquidation facilitates a clean exit from brick-and-mortar liabilities, allowing the brand to refocus on high-margin digital and wholesale channels.
Market positioning and future growth
The acquisition comes at a time when the footwear sector is seeing a 11 per cent decrease in average retail prices, as consumers increasingly prioritize the sub-$500 ‘accessible luxury’ segment. By integrating Chinese Laundry into a stable that includes Nicole Miller and Laura Ashley, Gordon Brothers intends to leverage its global licensing infrastructure. David Chin, Managing Director of Brands, noted, the firm will prioritize expanded distribution through new licensees to scale the brand's reach without the overhead of owned storefronts
Founded in 1971, Chinese Laundry evolved from a retail fixture business into a dominant force in women’s contemporary footwear. The brand currently operates across four distinct price tiers, catering to diverse demographics from Gen Z ‘fast fashion’ to premium leather goods. Following its 2026 acquisition, the company is projected to operate as an asset-light entity, focusing on e-commerce and wholesale partnerships to maintain its global footprint.
The attainment of B Corp Certification by Longchamp marks a strategic transition from voluntary corporate social responsibility to verified institutional accountability. In an era where the luxury market is projected to reach €380 billion by 2030, the family-owned maison is leveraging its independent structure to implement granular supply chain reforms that larger, multi-brand conglomerates often find difficult to execute.
This certification serves as a critical pre-emptive measure against the European Union’s upcoming Ecodesign for Sustainable Products Regulation. By aligning its governance with B Lab’s rigorous performance standards, Longchamp has solidified its market position, particularly as 64 per cent of luxury consumers now declare that a brand’s ethical credentials significantly influence their loyalty and purchasing frequency.
Circularity and the economics of repair
Beyond the symbolic value of the B Corp seal, Longchamp is scaling its infrastructure to meet the demands of a circular economy. The company’s commitment to increasing global repair center capacity by 20 per cent reflects a shift toward product longevity as a core revenue driver.
This initiative complements the successful transition of the signature Le Pliage range to 100 per cent recycled polyamide, which helped drive a record €1.25 billion in turnover. While the luxury sector navigates a broader cooling of demand in certain Asian hubs, Longchamp’s focus on ‘conscious luxury’ provides a buffer. The brand is betting that the long-term equity gained from environmental stewardship will outweigh the immediate administrative costs of compliance, securing its relevance among a younger demographic that views handbags as durable investments rather than disposable fashion.
Artisanal heritage and market expansion
Longchamp is a premier French leather goods house specializing in handbags, luggage, and accessories across 80 international markets. Founded in 1948 by Jean Cassegrain, the company remains independently family-owned. Its current strategy emphasizes expanding retail footprints in mainland China and the United States while sustaining high double-digit revenue growth.
The traditional high-street dominance of Primark is navigating a rigorous stress test as the retailer confronts a dual challenge from ultra-fast digital competitors and shifting consumer patterns. In its latest trading update for the 16 weeks ending January 3, 2026, parent company Associated British Foods (ABF) reported a 2.7 per cent decline in group like-for-like sales, despite a 1 per cent increase in total revenue to £3.5 billion.
While the retailer’s ‘Anti-Ecommerce’ stance was long a hallmark of its low-cost model, management has countered recent market share erosion by finalizing the nationwide rollout of Click & Collect across all 187 Great Britain stores. This strategic infrastructure shift aims to retain a younger, tech-savvy demographic that has increasingly migrated to platforms like Shein, which generated an estimated $38 billion in revenue in 2024.
Strategic expansion and geographic divergence
The retail landscape currently presents a stark regional contrast; while Primark’s UK operations showed resilience with a 1.7 per cent like-for-like growth, continental European markets saw a sharper 5.7 per cent contraction due to weakened consumer confidence. To offset these domestic headwinds, Primark is aggressively scaling its international footprint, recording a 12 per cent sales growth in the United States and launching its first franchise in Kuwait this quarter. Analysts at GlobalData suggest, while physical store expansion remains a primary revenue lever,
Primark’s long-term stability hinges on its ability to synchronize ‘Everyday Value’ with the real-time responsiveness of digital-first rivals. As the company forecasts a steady 10 per cent operating margin for FY26, the focus has shifted toward high-margin house brands and a low-stock holding model to minimize markdowns and enhance profitability in a volatile global economy.
The retail division of Associated British Foods, Primark is a leading international value fashion chain offering apparel, beauty, and homeware. It operates over 450 stores in 17 markets, with aggressive growth targets in the US and the Middle East. Founded in 1969, the brand maintains a high-volume, low-margin business model.
The appointment of Dua Lipa as Bulgari’s global brand ambassador signals a decisive move by the LVMH-owned maison to consolidate its influence within the high-jewelry sector.
By integrating the pop icon into its marketing framework, Bulgari is tapping into a consumer shift where ‘hard luxury’ assets - such as jewelry and timepieces- are increasingly viewed as essential lifestyle investments by younger affluent demographics. This strategy follows LVMH’s 2025 financial performance, where the Watches & Jewelry division maintained a 3 per cent organic growth rate, reaching a valuation of €10.5 billion.
This growth outpaced traditional leather goods, suggesting that high-ticket jewelry remains a more stable asset class during periods of normalized luxury spending. The association with Lipa provides Bulgari with a direct line to a digital-native audience that now accounts for over 40 per cent of luxury high-jewelry transactions globally.
Geographic hedging and portfolio diversification
The integration of Lipa into an ambassador roster featuring Anne Hathaway and Priyanka Chopra Jonas allows Bulgari to maintain a localized presence across fragmented global markets.
This diversified influence is particularly critical as luxury brands face fluctuating demand in ajor Asian hubs, necessitating a stronger performance in North America and Europe. In these Western markets, LVMH recently reported a revenue share increase of one percentage point, boosted by successful product launches like the Polychroma collection. By utilizing Lipa’s cultural relevance, the maison aims to lower the barrier of entry for high-jewelry appreciation, shifting the narrative from exclusive heritage to modern, wearable luxury. This approach not only supports current sales but also builds long-term brand equity among a generation that prioritizes authenticity and social influence in its purchasing decisions.
LVMH hard luxury division and brand evolution
Bulgari is an Italian luxury house renowned for Mediterranean-inspired high jewelry, watches, and accessories. Founded in 1884, it joined LVMH in 2011 to accelerate global distribution. The brand is currently expanding its presence in emerging markets like India and Japan, focusing on experiential retail and high-value investment pieces to drive fiscal growth.
The Indian textile manufacturing sector is navigating a complex raw material landscape as the Cotton Corporation of India (CCI) concludes its massive Rs 36,355 crore procurement drive this week. By absorbing over 90.97 lakh bales, the CCI has successfully established a price floor for farmers, yet this sequestering of high-grade domestic fiber has forced spinning mills into a supply squeeze. To prevent industrial stalling, the Ministry of Textiles has mandated that half of all state-held stocks be liquidated through dedicated e-auctions exclusively for domestic consumption. This intervention aims to bridge the gap during a season where domestic output hit a decade-low of 29.2 million bales, ensuring that the critical spinning and weaving segments maintain operational continuity without succumbing to local price spikes.
Global sourcing and the yarn forward advantage
Faced with domestic shortfalls, apparel exporters are increasingly leveraging the duty-free import of premium long-staple cotton, which increased by 158 per cent last quarter. The evolving India-US trade framework offers a strategic opening via ‘yarn forward’ protocols, allowing manufacturers to integrate imported American fiber into high-end garments destined for Western retail shelves with significant tariff concessions. While this provides a short-term hedge, the industry remains wary of exchange rate volatility and the logistical costs of transcontinental sourcing. According to market analysts, the mid-term stability of the Indian apparel sector now hinges on the Mission for Cotton Productivity, which seeks to boost stagnant yields and reduce the reliance on external markets, ultimately harmonizing domestic raw material security with global export ambitions.
Market positioning and heritage
The Cotton Corporation of India (CCI) operates as the primary central agency for cotton price support and commercial trading. Historically founded in 1970, it serves global textile hubs while managing 571 procurement centers. The corporation currently projects a focus on digital transparency through its e-auction platforms and long-term yield improvement programs.
Finalizing the acquisition of the Fred Segal brand, Vancouver-based Aritzia has secured the intellectual property and a long-term lease for the legendary 8,100-sq-ft flagship at 8100 Melrose Avenue. Rather than a standard boutique expansion, Jennifer Wong, CEO describes the move as a stewardship project to transform the ivy-covered landmark- damaged in recent storms- into an ‘immersive lifestyle hub.’ By integrating its vertically integrated supply chain with Fred Segal’s celebrity-linked ‘California cool’ heritage, Aritzia aims to capture a younger demographic that lacks a nostalgic connection to the 1960s label but craves the ‘Everyday Luxury’ experiential shopping model that has fueled Aritzia’s recent growth.
Strategic real estate and fiscal 2027 ambitions
This acquisition is a cornerstone of Aritzia’s aggressive US expansion, where net revenue increased by 53.8 per cent to $621 million in the latest quarter, now accounting for nearly 60 per cent of total sales. The company is currently on track to hit its FY27 revenue target of $3.5 billion to $3.8 billion, supported by plans to grow its American boutique count to over 150 locations. While retail analysts at GlobalData suggest Fred Segal's ‘glory days’ had faded commercially, Aritzia's masterclass in brand storytelling and a healthy $620 million cash position allow it to play the long game. The primary objective is to utilize the Melrose site as a premium testing ground for menswear and higher-tier product lines, navigating broader retail headwinds through high-margin, house-brand dominance.
Aritzia is a vertically integrated fashion house specializing in ‘everyday luxury’ through exclusive house brands like Babaton and Wilfred. Operating 139 boutiques across North America, the firm projects fiscal 2026 revenue of $3.6 billion. Founded in 1984, Aritzia has transitioned from a local Vancouver boutique to a global publicly traded powerhouse.
The US fashion industry has secured a landmark legal victory following a 6-3 Supreme Court decision on February 20, 2026, which invalidated billions of dollars in tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Authorizing a decisive end to the executive branch's use of emergency statutes to levy import duties, the ruling establishes,such taxing authority rests exclusively with Congress. For apparel and footwear brands that have been navigating a high-tariff environment since 2025, the decision effectively strikes down the ‘Reciprocal’ and ‘Trafficking’ tariffs that had inflated landed costs and disrupted global sourcing networks.
Legal clarification and financial repercussions
The core of the judicial narrative centers on the limits of the IEEPA, a 1977 law that allows the president to regulate commerce during national emergencies. Chief Justice John Roberts clarified, while the president may ‘regulate’ importation, this does not grant the power to impose monetary exactions without express congressional consent. This distinction is vital for the textile sector, which has already paid more than $133 billion into the federal treasury under these specific measures. Julia Hughes, President, USFIA characterized the ruling as a critical move toward restoring economic predictability, noting that these extra costs have historically stifled new investments in brand expansion and retail technology.
Navigating the refund process and future constraints
While the legal foundation of the tariffs has crumbled, the mechanism for capital recovery remains a primary challenge for importers. The Supreme Court has remanded the remediation process to the US Court of International Trade, creating a complex administrative hurdle for brands seeking to reclaim their funds. The USFIA is currently urging the administration to establish an automated refund process to prevent a protracted ‘liquidation mess.’ However, the relief may be tempered by the administration’s immediate move to reimpose a temporary 10 per cent surcharge under Section 122 of the Trade Act of 1974. This transition signals that while the legal ‘scaffolding’ of previous tariffs is gone, the fashion industry must remain agile as trade policy enters a more fragmented, statute-specific era.
Sector background and strategic outlook
The United States Fashion Industry Association (USFIA) represents the interests of multi-national brands, retailers, and importers dedicated to global trade. Founded to eliminate barriers in the apparel value chain, the association works across major hubs in Asia, Central America, and Europe. USFIA’s current focus is assisting members in auditing historical entries to maximize refund potential while hedging against new Section 301 and 232 investigations. Historically a vocal advocate for free trade, the association has shifted its fiscal outlook toward supporting companies in a high-compliance environment focused on sustainability and supply chain traceability.
Lululemon has significantly strengthened its London retail portfolio with the unveiling of a new flagship store on Kensington High Street. This launch signals the Canadian athletic powerhouse’s intent to deepen its market share in the United Kingdom’s £6.7 billion sportswear sector. The location debuts an evolved retail identity featuring neutral wood finishes and an expanded ‘pant wall’ designed to streamline the consumer journey. This physical expansion comes as Lululemon reports a 19 per cent increase in international net revenue, a figure the brand aims to quadruple from 2021 levels by the end of 2026.
Strategic premiumization of the London footprint
The Kensington opening is a critical component of Lululemon’s ‘Power of Three ×2’ growth roadmap, which prioritizes market expansion and guest experience. By securing a high-visibility site in one of London’s most affluent shopping corridors, the brand is targeting high-net-worth ‘active lifestyle’ consumers who drive high transaction values. Our stores serve as community hubs that foster deeper brand engagement than digital channels alone, notes Sarah Clark, Senior Vice-President - EMEA. This localized strategy is essential as the brand faces intensifying competition from high-growth rivals like Alo Yoga and Vuori, who are also aggressively bidding for premium London floor space.
Operational resilience and product diversification
Despite macroeconomic headwinds affecting discretionary spending, Lululemon’s premium positioning has allowed it to maintain a robust 58.3 per cent gross margin. The new store acts as a gallery for the brand’s diversification into ‘work-train-play’ categories, including the high-margin footwear line and the ‘ABC’ men’s apparel franchise. As the brand navigates the challenge of rising operational costs in the UK, it is utilizing data-led inventory management to maintain a 10 per cent Y-o-Y reduction in inventory growth relative to sales. This disciplined commercial approach ensures that new flagships like Kensington contribute to the brand’s global target of $12.5 billion in annual revenue by the close of the current fiscal cycle.
Founded in 1998 in Vancouver, Lululemon Athletica is a premium technical athletic apparel and footwear brand. Operating over 711 stores globally, it focuses on yoga, running, and training gear. With a target to double men’s and digital revenues by 2026, the company maintains a debt-free balance sheet and a market-leading international growth trajectory.
