Indian Textile Exporters Face Severe Impact from Prolonged US Tariffs
India's textile sector faces severe distress from a 50% US tariff imposed over four months ago, forcing manufacturers to absorb ~25% of tariff costs and cut selling prices by ~15%. Export data shows India's textile shipments to the US declined 5-6% while competitors Bangladesh and Vietnam gained market share. Industry leaders warn smaller players may exit the business, potentially causing job losses and factory closures across key textile hubs like Tirupur and Karur.
*this image is generated using AI for illustrative purposes only.
India's textile sector is grappling with severe challenges as a steep 50% US tariff continues to devastate export operations for over four months. The prolonged tariff shock is impacting the entire value chain, with micro, small, and medium enterprises (MSMEs) bearing the brunt of the crisis.
Industry-Wide Impact and Response Strategies
Textile companies are being forced to implement drastic measures to survive the tariff burden. Most Indian suppliers are now sharing the tariff costs with buyers, directly impacting profitability across the sector.
| Challenge: | Impact |
|---|---|
| Tariff Burden Sharing: | Manufacturers absorbing ~25% tariff |
| Price Reduction: | ~15% cut in selling prices |
| Market Shift Timeline: | 6-8 months for supply chain reconfiguration |
| Export Decline: | 5-6% drop to US (Sep 2025 vs Sep 2024) |
RK Vij, National President of the Textile Association of India, emphasized that companies are actively trying to reduce dependence on the US market. However, he cautioned that transitioning to new markets requires significant time and resources, with reconfiguring supply chains, machinery, and buyer relationships taking six to eight months.
Corporate Adaptation and Market Dynamics
Pallab Banerjee, MD and Group President of Pearl Global, revealed that US buyers remain unwilling to absorb the full tariff impact without clarity on duration. The company's diversified manufacturing strategy has provided some protection, with over 70% of production occurring outside India in Bangladesh, Vietnam, Indonesia, and Guatemala.
Despite this geographic diversification, Pearl Global is experiencing slower India-based production for the US market and is actively rebalancing order books toward other regions. Banerjee warned that the current pricing pressure is unsustainable long-term for most manufacturers.
Competitive Landscape Shifts
The tariff impact has created a clear competitive disadvantage for Indian exporters. Market share data reveals significant shifts in US sourcing patterns:
| Country: | Export Performance (Sep 2025 vs Sep 2024) |
|---|---|
| India: | -5% to -6% decline |
| Bangladesh: | +10% growth |
| Vietnam: | +2.5% growth |
This data indicates American buyers are actively shifting sourcing away from India toward competitors who can offer more competitive pricing.
Regional and Sectoral Challenges
Key textile manufacturing hubs are experiencing widespread distress. Vij highlighted that regions including Tirupur, Karur, and the NCR-Panipat market are all suffering significant impacts. The cotton garment sector, which previously generated approximately ₹83,000 crores ($10 billion) in annual US exports, has been particularly affected.
Banerjee warned of potential industry consolidation, stating that smaller textile players are likely to exit the business if conditions don't improve soon. This could result in job losses and factory closures across India's textile manufacturing base.
Government Support and Industry Outlook
While government initiatives including credit facilities and Production Linked Incentive (PLI) schemes are providing some relief, industry leaders believe additional support is necessary. Vij emphasized the critical need for making raw materials such as cotton and man-made fibers available at international prices to help exporters maintain competitiveness in global markets.
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