India's textile industry sees opportunity despite $2 bn blow

Tension is mounting across the textile value chain, with stakeholders alarmed by the uncertainty and commercial unviability of the new US tariff regime. Industry sources revealed that exporters have begun holding back current garment and textile export orders from US buyers, fearing they will not be able to dispatch consignments within the permissible window for clearance at US ports under the earlier tariff rates. With limited scope to absorb the additional tariff burden, both buyers and sellers are now at a standstill.

Sanjay K Jain, chairman of the ICC National Textiles Committee and managing director of TT Ltd, told Fibre2Fashion, “If we assume average monthly garment and textile exports to the US at $800 million, stocks worth nearly $2 billion are stuck due to the unreasonably high tariffs on Indian goods.”

He raised several critical questions for the consideration of the industry, the Indian government, and the country at large. Jain emphasised that the industry needs immediate cash incentives to mitigate the impact of the US tariff hikes. While the Indian government is attempting to support the industry during this difficult period, it is reportedly unwilling to provide country-specific incentives—which are crucial in the current scenario.

He pointed out that China had faced similar challenges and had responded with immediate relief for its industry. The country also succeeded in negotiating a comfortable interim trade agreement. Jain further raised these concerns in a LinkedIn post, arguing that the government is saving substantially from cheaper Russian crude oil and should use those savings to provide incentives to the industry.

Jasveen Kaur, senior director of merchandising for garment sourcing at New Times Group, told F2F, “From where we stand, I believe that the US and India will eventually find a resolution—and the current 21-day window is a strong indicator that dialogue and diplomacy are in motion. However, in the interim, we must act decisively and strategically.”

She acknowledged that if the proposed 50 per cent tariff becomes a long-term reality, it could affect 45–50 million people directly or indirectly employed in the sector. In the short term, no alternative market can fully compensate for the volume and value currently offered by the US. The void will be felt across the supply chain, as India’s textile and apparel sector is deeply intertwined with the US market, which accounts for a significant share of exports.

Despite the challenges, she expressed a sense of optimism. “We have Free Trade Agreements with Japan, the UAE, the UK, and Australia—offering promising avenues for expansion. Strengthening our presence in these markets will not only mitigate risk but also unlock new growth opportunities,” she said. “While the tariff is undoubtedly disruptive, it also serves as a wake-up call. We must build resilience by diversifying our market exposure.”

Commenting on current export orders, Kaur said exporters will attempt to accelerate production for early shipment and may resort to airlifting goods to ensure delivery before the tariff hike takes effect. However, new orders may be diverted to competing countries such as Bangladesh, Vietnam, and others—posing a significant loss for Indian exporters.

Santosh Katariya, president of the Clothing Manufacturers Association of India (CMAI), said, “The imposition of an additional 25 per cent tariff on India will deliver a crippling blow to the Indian apparel industry. The proposed hike will make Indian apparel costlier by 30–35 per cent compared to alternatives from countries like Bangladesh and Vietnam, rendering Indian exports uncompetitive in the global market. Buyers are unlikely to absorb such a substantial pricing gap, which could lead to a sharp decline in export orders.” He termed the move as "unjustified, unfair, and arbitrary."

Rahul Mehta, chief mentor of CMAI, stated, “While we continue to hope that this development is part of a broader negotiation strategy, we strongly recommend that both the government and the industry collaborate urgently to devise measures that can mitigate the adverse impact of this draconian levy.” CMAI anticipates that the coming months will be extremely challenging for the Indian apparel export sector and is calling for strategic intervention to safeguard the industry's long-term viability.

ALCHEMPro News Desk (KUL)