India’s readymade garment industry, which has long been a steady earner for the country, is now staring at one of its toughest challenges in recent years. The U.S. government’s recent hike in tariffs on certain imported textiles has sent shockwaves through India’s apparel export ecosystem. And truth be told, the timing couldn’t have been worse.
For decades, the U.S. has been India’s single biggest market for garments, accounting for nearly 27–30% of total exports in this sector. From cotton shirts to fast-fashion dresses, Indian exporters have built strong buyer relationships with American retailers. But with tariffs going up by 10–15% on a range of products, those margins are quickly evaporating.
A Tirupur-based exporter summed it up candidly: “We were already fighting rising raw material costs and stiff competition from Bangladesh and Vietnam. Now, with higher tariffs, our buyers are quietly shifting orders elsewhere. It’s heartbreaking.”
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Why the Tariffs Sting More This Time
To be fair, this isn’t the first time Indian apparel exporters have had to deal with external shocks. The industry has weathered currency fluctuations, raw material shortages, and even shifting fashion trends. But U.S. tariff hikes are a different beast altogether.
For one, Bangladesh and Vietnam still enjoy preferential trade agreements with the U.S., which means Indian exporters suddenly look expensive in comparison. Add to that India’s already higher compliance costs—labour laws, environmental regulations, certification requirements—and you’ve got a perfect recipe for lost business.
One industry consultant I spoke to described it bluntly: “India’s garment sector is good at quality and scale, but not at agility. Buyers want cheaper and faster, and right now, Bangladesh and Vietnam are ticking those boxes better than us.”
Ripple Effects Across the Value Chain
The slowdown isn’t just hurting exporters; it’s hitting the entire ecosystem that depends on them. Spinning mills, dyeing units, transporters, even packaging suppliers—many small businesses in hubs like Tirupur, Ludhiana, and Surat are feeling the pinch.
Workers, too, are on edge. Seasonal layoffs, reduced overtime, and delayed payments are being reported in some clusters. The industry, which employs over 12 million people directly and indirectly, simply doesn’t have the cushion to absorb a prolonged slowdown.
Interestingly, a few large exporters are still holding on, thanks to diversified portfolios. They supply not just to the U.S. but also to Europe and the Middle East. But smaller players, who depend heavily on American orders, are in survival mode.
Read: How to Start a Garment Manufacturing Business
Government and Industry Looking for a Way Out
So, what’s being done? The industry has already started knocking on the government’s door for support. Export incentives, interest subvention, and faster GST refunds are some of the immediate asks. But beyond that, exporters are urging New Delhi to push for stronger trade negotiations with Washington.
Some in the sector believe this could even reignite the debate on a possible Free Trade Agreement (FTA) between India and the U.S. While that might sound like a long shot, industry insiders argue that unless India gets some preferential access, it will keep losing ground to regional competitors.
At the same time, there’s a quiet shift in strategy happening on the ground. More exporters are looking at non-U.S. markets—particularly in Europe, Latin America, and Africa. There’s also renewed talk about tapping into India’s own domestic consumption boom. After all, the country’s middle class is expanding, and demand for affordable fashion is only rising.
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A Moment of Reckoning for the Sector
If you talk to old hands in the industry, many will admit that this slowdown is also forcing some tough but necessary conversations. For years, India’s garment industry has been a bit slow in adopting automation, digital supply chains, and sustainable practices at scale. Buyers, especially in the West, now demand traceability and eco-certifications. If Indian exporters don’t move faster, they risk being left behind—not just by Bangladesh and Vietnam, but by newer players like Ethiopia that are trying to carve out a slice of the market.
It’s not all doom and gloom, though. India still has strengths that are hard to ignore—skilled labour, diverse product ranges, and a well-established production base. The question is whether the industry can adapt quickly enough to weather this storm.
As one exporter in Delhi told me, with a weary smile: “We’ve seen ups and downs before. This time it feels tougher, but the garment business is like fashion itself—cyclical. We’ll have to ride it out and come back stronger.”
