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[India's textile industry faces a double whammy of US tariffs and Middle East conflict, with cost fluctuations compounded by cautious orders] ⑴ After months of fluctuating raw material costs, Indian textile and apparel exporters are facing new uncertainties. The outcome of US tariff negotiations remains unclear, while the resumption of conflict in the Middle East could push up freight costs and disrupt supply chains. ⑵ Cotton prices previously surged due to El Niño concerns, but the market gradually stabilized after the government removed import tariffs on long-staple cotton and increased imports. Some exporters locked in yarn prices and production capacity in advance to cope with fluctuations. ⑶ By mid-May, benchmark Gujarat cotton prices had risen by about 10% month-on-month, while spot prices rebounded again on July 14. International ICE cotton futures rose by more than 6% that week, reigniting concerns about global supply. ⑷ Analysis indicates that the impact of rising cotton prices on the industry chain is clearly differentiated. Cotton accounts for nearly 70% of the raw materials in the home textile and textile sector, while about 70% of the garment manufacturing sector relies on polyester, which is more directly affected by oil price fluctuations. (5) The United States is India's largest export market for textiles and apparel, with annual shipments of approximately US$10.5 billion. However, industry estimates suggest that only about 8%-10% of the industry's revenue relies on the US market, indicating relatively limited direct exposure. Trade agreements between India and the UK, and India and the EU, have begun to generate increased inquiries. (6) Uncertainty regarding tariff prospects has led overseas buyers to favor small-batch, high-frequency orders, postponing long-term contracts. Although exporters are using discounts to offset some tariff costs, overall demand has not yet been significantly damaged, and the long-term outlook remains optimistic. It is expected that the benefits of trade agreements will gradually materialize in the fourth quarter of fiscal year 2027.