India’s Trade Ambitions Face Test Amid US Tariffs and growing ASEAN Frictions

August 26, 2025 at 13:52 PM EDT

As the United States imposes fresh tariffs on key imports from India, and negotiations on a strategic trade agreement remain standstill, the outlook for India’s textile sector is increasingly being shaped by geopolitics and regulatory alignment.

For global fibre manufacturers such as the Austria-based Lenzing, which has operated in India for over two decades, the current moment is an opportunity and a warning at the same time.

Rohit Aggarwal, Lenzing’s Chief Executive says the potential for transformation is real but only if India aligns its domestic frameworks with international standards.

“A strategic trade understanding with the US and an FTA with the EU could unlock high-value, sustainable textile markets for India,” he notes.

“Trade today is about frictionless standards, mutual recognition, and long-term trust.”

India’s textile ambitions are hampered not just by duties but also by regulatory friction.

“Non-tariff barriers such as Quality Control Orders have delayed approvals for inputs from our Southeast Asian facilities, even when those sites meet international standards, he said.

Meanwhile, materials from its European plants are cleared, and these highlight inconsistencies that affect sourcing agility and investor confidence.

“We support India’s right to ensure quality, but these regulations must be transparent, timely, and globally aligned,” Aggarwal notes.

The delays are not simply irritants for companies but these can harm Indian weavers, exporters, and brands relying on certified sustainable inputs.

Trade agreements could play a big part in moving forward.

“A trade deal with the EU would avail new opportunities for Indian textiles, especially high-value and sustainable segments,” Aggarwal notes.

Regulatory diplomacy a must

Compounding the issue are growing strains in India’s trade ties with ASEAN nations such as Indonesia, Vietnam, and Thailand. These countries are all major hubs for sustainable fibre production and they are critical to Lenzing’s supply network.

If India’s unresolved disputes with these neighbours escalate, the resulting fragmentation could not only raise input costs but also weaken India's position in regional value chains.

“India’s vision of textile leadership must include smooth, standards-based trade flows with its neighbours,” Aggarwal says. “What we need is regulatory diplomacy, not fragmentation,” he added.

The investment implications are real. Lenzing, which has introduced circular innovations like REFIBRA™ and issued Green Notes for its climate strategy, is keen to boost its India presence. But uncertainty in market access and compliance slows long-term investment decisions.

With countries like Bangladesh and Vietnam racing to modernise their regulatory frameworks to attract more FDI, India faces pressure to match pace.

For Lenzing, the path forward is clear. India needs policy stability, standards convergence, and transparency across the supply chain.

“India has the scale, talent, and tradition to become a key player in sustainable textile corridor in South Asia,” he concludes.

“But ambition isn’t enough. We also need coordination within and beyond borders,” Aggarwal concludes.

For further information and interview requests, please contact:

Pia Heikkila

pia.heikkila@almamedia.fi

Media Contact
Company Name: Lenzing
Contact Person: Pia Heikkila
Email: Send Email
Country: Austria
Website: https://www.lenzing.com/

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India’s Trade Ambitions Face Test Amid US Tariffs and growing ASEAN Frictions

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