A 50% additional tariff on exports to the US market might cause a $5 billion hit to India’s textile and apparel exports on an annual basis, industry sources said. That means exports of these items to the US market will reduce by half if these levels of tariffs persist. The additional tariff will apply over and above the most favoured nation (MFN) rates, and takes the applied rate to, say, 60.3% in the case of woven apparel.
In FY25, India’s exports of textiles, made-ups, knitted and woven garments to the US markets stood at about $10 billion.
“At 50% (extra) tariff, we clearly see about $5 billion worth of business moving out of India,” Sudhir Sekhri, chairman of the Apparel Export Promotion Council (AEPC), said.
Delays in response and order cancellations from US buyers are threatening to wipe out substantial business for the units in the sector during the peak spring-summer demand season.
The move has eroded India’s competitiveness against key rivals like Bangladesh, Vietnam, and Sri Lanka, which face only a 20% tariff.
“Even the 25% tariff was devastating, and this additional 25% will really break our back,” Sekhri said.
While the 50% tariff is not yet final, uncertainty is already pushing US buyers to look for alternative sourcing destinations.
“Buyers have already started walking away in the last two days. They’ve cancelled fresh orders and are even asking to put existing ones on hold,” Sekhri told FE, adding that many are shifting back to China.
The US is the single largest market for India’s textile and apparel exporters, which stood at $36.61 billion in FY25. Of this, apparel exports alone were valued at $16 billion, with $5.2 billion going to the US and $7.8 billion to Europe; the rest is exported to markets such as the UAE and Africa.
The tariff shock comes as a dampener during the peak export season. Overseas buyers typically place orders during August–September, with deliveries beginning from December for the Spring-Summer 2026 cycle.
A Blow to Key Hubs and Product Categories
“It’s an unexpected hike and it will definitely affect us,” said KM Subramanian, President of the Tiruppur Exporters’ Association (TEA). Tamil Nadu accounts for the largest share of the country’s textile and apparel exports, with Tiruppur alone contributing $4.69 billion (₹40,000 crore) in FY25. About 30% of Tiruppur’s exports are US-bound.
“10–15% of that business will surely be affected,” Subramanian said, adding that some committed buyers may continue sourcing from India despite cost disparities.
India’s apparel exports to the US primarily include cotton T-shirts, knitwear, innerwear, activewear, and baby garments. Subramanian said high-value garments such as performance activewear, embellished or branded garments, and winterwear may not be affected. However, low-value items like basic cotton T-shirts, budget innerwear, and low-cost kidswear are likely to take the biggest hit due to their price sensitivity.
Navigating the Crisis: Industry’s Call for Government Support
TEA is in talks with the government to arrange incentives and is also exploring alternate markets such as Europe, the UK, and the UAE to cushion the impact of declining US orders.
However, AEPC’s Sekhri pointed out that shifting to new markets is easier said than done. “It will not happen tomorrow. To onboard a new retailer takes anywhere from 1.5 to 2 years,” he said.
The industry is now banking on government intervention to negotiate a rollback or reduction in tariffs. AEPC has urged the Centre for direct fiscal support and a revival of the interest subvention scheme to help exporters stay afloat.