"50% Tariff, 100% Grit: India’s Apparel Makers Fight Back", 31 August 2025

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The United States has doubled tariffs on Indian apparel to 50% (63.9% on knitted apparel and 62.3% on woven apparel)...

For decades, the US has been our biggest and most demanding customer. Its market not only takes a large share of our output, but also shapes how we design, how we produce and how we plan capacity. Now, almost overnight, that equation has changed. From vertically integrated exporters to the mid-sized operators, every player is feeling the squeeze. Orders are being put on hold. Contracts are being rewritten. Some buyers want manufacturers to absorb the cost, others hint at moving their business to cheaper shores. Non-branded buyers are already packing their bags. The branded ones may stay for our compliance standards and reliability, but even they warn, there will be pain.

Right now, about one-third of India’s garment exports...go to the US...Losing this business could directly affect around 700,000 workers and indirectly impact another 1.5 million workers in areas that serve the US market...

...Pallab Banerjee, MD, Pearl Global Industries...noted, “The increase from 25% to 50% US tariff on India has made it difficult for global retailers to continue sourcing from India this season.” He added that many retailers now want to quickly move their business out of India to other countries.

...Mithileshwar Thakur, Secretary General, AEPC, pointed out that, “Major US retailers such as Walmart, Amazon, Target and Gap Inc., have paused or halted orders, with exporters receiving written instructions to suspend shipments until further notice.”

He further mentioned that buyers are unwilling to share the increased costs, which are estimated to rise by 30-35%, and are pressurising exporters to absorb the full burden. Indian exporters are not at all in a position to absorb such a steep rise in tariff. This situation is prompting diversion of orders to Bangladesh and Vietnam...

“Brands are willing to accept the goods that have already been shipped, but the rest of the orders have been put on hold. We expect 50% of business to the US...to be impacted,” said K M Subramanian, President, Tirupur Exporters Association (TEA) and Founder, KM Knitwear, a vertically integrated garment manufacturer.

Some manufacturers said that when the tariff was 25%, brands managed costs by ‘de-specing’, reducing product features to keep prices stable, similar to shrinkflation. But with the tariff now at 50%, these measures aren’t enough.

“Earlier, when the tariff was 25%, brands were willing to share the extra cost with us. But now, they are not coming back and have put orders on hold. We already have October-November bookings in production, but it’s unclear how these will be handled under the new tariffs. If new orders don’t come, the gap will be another big challenge,” said Sanjeev Menon, VP – Business Development, Best Corporation Pvt. Ltd...

“We have already made the goods and are ready to ship, but buyers have asked us to hold shipments because of uncertain situation. This hesitation is not just about the goods we have produced, but also about new orders we discussed with them last month when we were in the US,” said Ziaul Alikhan, Marketing Manager, Aathava Garments India Pvt. Ltd. The Coimbatore-based manufacturer produces about 8.4 million pieces per year, with 60% of this going to the US market, mainly through Walmart, their major client.

He added, “Buyers expect us to share at least 15% of the tariff cost, but we cannot do that because the prices we have are already very competitive.”

...Amrith Govindan Kutty, Senior GM (Marketing and Merchandising), Sakthi Infra Tex Pvt. Ltd.,...based in Perundurai, Tamil Nadu, with an annual production capacity of 90 million pieces —70-75% of which are exported to the US—said, “Since the tariff was announced, our US buyers have not placed any new orders.”...

Those with manufacturing units abroad are in a better position to handle this situation. The strategy is to shift US-bound production to overseas facilities while moving some of the production from those countries back to India...

...Pallab Banerjee mentioned that, “The increased tariff has triggered an immediate order shift, with buyers pushing for production to be relocated to alternative manufacturing hubs like Bangladesh, Vietnam, Indonesia and Guatemala where Pearl Global already has operational capacity.”...

Smaller exporters and MSMEs may struggle with reworking production schedules, negotiating raw material costs or shifting manufacturing to other geographies, given their smaller scale and lower bargaining power. Cash flow management will become even more critical as delayed payments or cancelled orders can severely impact day-to-day operations. Rahul Mehta, Chief Mentor, CMAI

Experts point out that not everything is doom and gloom. Many big US retailers have a strong retail presence in India such as Nike, Levi’s, Tommy Hilfiger and Walmart (through Flipkart). For them, India is not just a production hub; it is also a major retail market.

This is important because under India’s FDI rules, foreign single-brand retailers with 100% ownership must source at least 30% of what they sell in India from within the country. This sourcing rule is averaged over the first five years and then becomes an annual requirement. Therefore, even if US-bound exports slow down because of tariffs, these brands will still need Indian manufacturing for their local stores...