Indian garment and textile exporters have been hit by a fresh wave of uncertainty just as factories gear up for the next US fall–winter buying season, with the threat of a punitive 500 per cent American tariff pushing overseas buyers to rethink sourcing plans and divert new orders away from India.

Industry executives said US brands that had earlier been looking to expand their India sourcing footprint are now stepping back. Several exporters have received messages from buyers seeking clarity on whether the steep duty would apply, and in some cases asking who would bear the cost if it is imposed. With no clear answers, buyers are increasingly shifting sampling and production discussions to alternative manufacturing hubs in Asia.

Indian textile exporters face fresh uncertainty ahead of the US fall–winter buying season as fears of a punitive 500 per cent tariff unsettle buyers.
US brands are delaying or diverting orders, intensifying pressure on exporters already hit by earlier duties.
With Tiruppur reporting sharp order declines, industry leaders warn prolonged uncertainty could drive large-scale sourcing shifts away from India.

The risk is particularly acute because the US is India’s largest single apparel and textile market. In 2024–25, India exported textiles and garments worth about $37 billion, with nearly 28–30 per cent of that destined for the US. A 500 per cent duty, exporters warn, would make Indian products unviable overnight, effectively shutting India out of the US market.

The industry is already under strain from the earlier 50 per cent US tariff imposed in August. To keep shipments moving, exporters have been forced to offer deep discounts, divert surplus capacity to domestic brands, and route some export orders through neighbouring countries. Even with these adjustments, overall textile exports slipped 2.27 per cent in April–November 2025, while apparel shipments grew only marginally by 2.28 per cent, underscoring how fragile demand has become.

The knitted garment hub of Tiruppur, which accounts for nearly 90 per cent of India’s knitwear exports, is feeling the pressure most sharply. Exporters there report that US orders for the coming fall season are already down by about 50 per cent, as buyers test suppliers in other countries to hedge against tariff risk.

Companies that have begun production for all-season orders now fear that a 500 per cent levy would amount to a de facto embargo. With US buyers already shifting sampling programmes abroad, industry leaders warn that a prolonged standoff could trigger a large-scale migration of business away from India, putting factory utilisation, jobs and investment plans at serious risk just as the peak export season approaches.

Talk of a fast-tracked US–India trade deal has added another layer of uncertainty to the market. Negotiators from both sides have been working to stabilise bilateral trade ties ahead of the US election cycle, with India pushing for the removal of punitive duties on key labour-intensive sectors such as garments, home textiles and footwear. While officials have signalled progress on a limited trade package, exporters say the absence of a clear timeline is keeping buyers cautious. Until a formal agreement or tariff rollback is announced, US brands are continuing to diversify sourcing away from India to avoid the risk of sudden cost shocks in the middle of the buying season.

Fibre2Fashion News Desk (KUL)

The persistent decline in exports in Bangladesh is a warning signal, according to Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), who recently cautioned that 2026 would be challenging for exporters due to graduation from the least developed country (LDC) status and the scheduled national election.

Bangladesh may struggle to meet its export target for the current fiscal, he noted.

“Competition in European and other markets has intensified as China and India aggressively capture orders displaced by US tariffs,” he was cited as saying by domestic media.

The persistent decline in exports in Bangladesh is a warning signal, according to Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue.
He has cautioned that 2026 would be challenging for exporters due to graduation from the least developed country status and the scheduled national election.
Bangladesh may struggle to meet its export target for the current fiscal, he noted.

Innovation, reduced lead times, reducing the cost of doing business and product and market diversification could have a significant bearing on exports, he added.

Fibre2Fashion News Desk (DS)