Vardhman Textiles is strategically positioned to benefit from a significant shift in the global textile supply chain caused by the imposition of US tariffs on China. With growing trade tensions between the US and China, many textile orders are moving away from China to other competitive textile-producing countries, including India and Bangladesh. This change presents a long-term growth opportunity for Vardhman Textiles, one of India’s largest vertically integrated textile manufacturers.

India exports nearly 45 percent of its yarn production to Bangladesh, where it is used extensively in the manufacture of ready-made garments destined primarily for export to large markets such as the European Union and the United States. This symbiotic relationship between India and Bangladesh in the textile value chain has positioned both countries as viable alternatives to China for global brands like GAP, H&M, and Uniqlo.

Neeraj Jain, Managing Director of Vardhman Textiles, stated in a recent earnings call that if China becomes less competitive due to tariffs and trade restrictions, business will flow to other countries including India, Bangladesh, Japan, and Pakistan. Each of these countries holds unique advantages, but India’s large and integrated textile manufacturing capacity offers significant potential to capture increased market share. This is expected to lead to pricing gains and better export volumes for Vardhman.

Impact of US Tariffs and Strategic Positioning

Earlier this year, US President Donald Trump imposed a 26 percent tariff on Indian textile exports, impacting Indian manufacturers’ ability to compete. However, this tariff imposition has been paused for 90 days to allow bilateral discussions, giving hope for a more favorable outcome for India. Since the US remains India’s largest export market, comprising approximately 28 percent of textile exports for FY24, the resolution of this tariff dispute is critical.

India is currently the third largest textile supplier to the US, accounting for 9 percent of the US’s total textile imports in 2024, according to India Ratings. Vardhman Textiles is working closely with its US-based customers who view the current tariff scenario as "short-term pain for long-term gain." Executive Director Sagrika Jain noted that the company is proactively engaging with customers to understand evolving needs and positioning itself as a reliable strategic partner amid these disruptions.

Cost and Pricing Dynamics

Currently, textile exports from India face a 10 percent tariff, but the additional 26 percent imposed by the US has been a challenge. According to Vardhman, much of the extra cost has traditionally been borne by the buyer brands. However, there are now discussions where brands are requesting that fabric producers or spinners share part of the tariff burden. Vardhman, however, has not agreed to these demands yet, signaling ongoing negotiations on how to manage costs while maintaining competitiveness.

India-Bangladesh Supply Chain Advantage

India’s role as a key supplier of yarn to Bangladesh is a crucial competitive advantage. Bangladesh uses Indian yarn to manufacture garments for export to major markets, effectively acting as an extension of the Indian textile export footprint. This trade partnership is expected to strengthen as global retailers seek to diversify away from China. The tariff advantage enjoyed by exporting from India or Bangladesh allows suppliers to share benefits across the supply chain, fostering collaboration and mutual growth.

Long-Term Outlook

Despite the near-term challenges posed by tariffs and international trade dynamics, Vardhman Textiles remains optimistic about the long-term prospects. The company’s vertical integration in yarn and fabric production, coupled with its established relationships with global retail brands, positions it well to capitalize on shifting demand patterns. As trade negotiations progress, Vardhman anticipates that the pause on tariffs will culminate in more favorable terms for Indian textile exporters.

Moreover, the global textile industry is undergoing a transformation, with supply chains becoming more regionalized due to geopolitical tensions and tariff policies. Vardhman Textiles aims to leverage these changes by enhancing its capacity, operational efficiency, and customer engagement to strengthen its foothold in major export markets.

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