Pearl Global, the country’s largest listed garment exporter, expects the US share of its exports to fall below 50% as part of its risk-mitigation strategy. The shift will be supported by rising business from the European Union (EU) and the UK following recent trade agreements, along with growing traction in markets such as Australia and Japan.
“Four years ago, the US accounted for 85–90% of our exports. That has come down to about 50% in the current financial year and should ease further, as most EU and UK customers have begun discussions to source from India,” Pallab Banerjee, managing director of Pearl Global Industries Ltd., told FE.
Pearl Global operates 25 manufacturing facilities across 10 countries, including India, Indonesia, Bangladesh, Vietnam, Guatemala, the US and Spain. Until now, the company largely serviced its European and UK customers from its units in Bangladesh and Vietnam. “Now, they want a share of sourcing from India as well,” Banerjee said.
He added that while India has long been viewed as a stable sourcing destination by European and UK buyers, tariff disadvantages had earlier limited sourcing from the country.
Leveraging Trade Pacts
Last month, India and the EU concluded a trade agreement that opens access to the EU’s $95-billion annual apparel and textile import market from non-EU countries. China and Bangladesh together account for over 50% of the EU bloc’s non-EU apparel imports, while India’s share stands at around 5%. India had also signed a free trade agreement with the UK last year, opening up an $18–20 billion apparel market.
While the UK trade agreement is expected to be operationalised by April, the EU deal is likely to come into effect from January 2027. In the interim, Banerjee said exporters face pressure following the suspension of the EU’s Generalised System of Preferences (GSP), which covered about 87% of India’s exports, including textiles. Apparel products that earlier attracted a 9.6% duty under the GSP are facing the full 12% tariff from January 1.
“Either customers absorb the higher duty to build their supply chains, or suppliers take a hit to build relationships. That is what is happening right now in the EU and UK markets,” he said. According to Banerjee, the reduction of US tariffs from 50% to 18% has eased the discount pressure on India’s textile exporters and will directly boost profitability from February onwards.
Banerjee added that India’s recent trade agreements with the US, EU and UK, along with existing pacts with Japan and Australia, have opened up over $250 billion in market opportunities for Indian apparel exporters.
Scaling Domestic Capacity
Pearl Global, a contract manufacturer for global brands such as Gap, Zara and Tommy Hilfiger, has an annual manufacturing capacity of 93.2 million pieces across woven and knit apparel. Bangladesh accounts for around 60% of this capacity in FY25. In India, the company has an annual capacity of 24.5 million units, with facilities in Gurugram, Chennai, Bihar and Bengaluru. It recently commissioned a production unit in Muzaffarpur, Bihar, and plans further expansion in India to meet demand arising from the new trade agreements.
“We will continue to grow across our manufacturing bases and diversify our customer mix globally,” Banerjee said, adding that reducing dependence on a single market is the biggest risk mitigation any business can undertake.