Blitz Bureau
NEW DELHI: An 18 per cent reciprocal tariff sounds like a tax story. For a cutting-room in Tiruppur or a tannery in Ambur, it is a ranking story — and the ranking has changed.
Under the trade understanding announced on 2 February 2026, the United States applies a reciprocal tariff of 18 per cent to originating goods from India, down from the 25 per cent reciprocal rate. A separate additional 25 per cent duty was removed by Executive Order, taking the effective burden down from close to 50 per cent. The 18 per cent band covers textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain machinery. A further set of lines — generic pharmaceuticals, gems and diamonds, and aircraft parts — had the reciprocal tariff removed altogether.
For an Indian exporter the absolute number matters less than the relative one, because apparel and footwear buyers do not choose between India and no India; they choose between India and the next country on the sourcing list. Vietnam and Bangladesh sit at 20 per cent and China in the 30–35 per cent band. India is now the cheaper of those doors by two percentage points against its closest competitor. On a garment programme with thin margins and long runs, two points is not a rounding error. It is the difference between a buyer moving a season’s order and leaving it where it is.
Where the two points land: textiles, apparel, leather and footwear sit inside the 18 per cent band — the labour-intensive sectors where a sourcing decision moves the most jobs.
A buyer never compares a tariff with zero. He compares it with the next country on the list.
At a Glance
• India’s reciprocal tariff: 18 per cent, reduced from 25 per cent
• Also removed: a separate additional 25 per cent duty, by Executive Order
• Effective burden: down from close to 50 per cent
• Inside the 18 per cent band: textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal goods, certain machinery
• Reciprocal tariff removed: generic pharmaceuticals, gems and diamonds, aircraft parts
• Competing rates: Vietnam and Bangladesh 20 per cent; China 30–35 per cent
• Announced: 2 February 2026
• Context: India’s July merchandise exports were a record $44.24 billion
The exemptions are the quieter half of the story and probably the more consequential one. Removing the reciprocal tariff on generic pharmaceuticals protects a trade that is not really an export line at all but a public-health arrangement: Indian generics underpin a large share of American prescriptions by volume, and a tariff on them is a tariff an American patient pays. Aircraft parts matter for a different reason — India is building a components industry around civil aviation, and a zero-tariff entry into the world’s biggest aerospace supply chain is worth more over a decade than any single garment order.
For readers who are not exporters, the practical translation is jobs and time. Apparel, leather and footwear are the most labour-intensive things India sells abroad, and they employ disproportionately more women than the rest of manufacturing; a sourcing advantage in those lines shows up as shifts and overtime within a season, not years later. The work now is unglamorous and entirely within India’s control: compliance documentation good enough to survive a customs query, lead times that hold in a peak week, and enough component depth that a buyer does not have to import fabric to make a shirt here. A tariff advantage is temporary by nature — rates move. Capability does not.
