US tariff hike puts Indian textile margins under pressure

The US move to double tariffs on Indian goods from 25 per cent to 50 per cent from August 27, 2025, places India’s textile exports in a vulnerable position, according to S&P Global Ratings.

The US decision to double tariffs on Indian goods to 50 per cent from August 27, 2025, puts India’s textile exports in a vulnerable spot.
The US is India’s top textile market with 9 per cent share.
While supply chains may limit disruption, low margins and high leverage mean exporters cannot absorb costs, weakening credit metrics and stretching working capital.

The US is India’s largest textile market, accounting for 9 per cent share of US imports, up from 6 per cent five years ago as buyers shifted sourcing away from China, whose share fell from 38 per cent to 25 per cent. India is now the third-largest textile supplier to the US after China and Vietnam.

While trade disruption may be moderate thanks to established supply chains and the US’ reliance on Indian suppliers, slim margins leave the sector exposed. Textile companies operate on low single-digit Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) margins with debt-to-EBITDA leverage above 4x, limiting their ability to absorb additional tariff costs.

Though the impact on exports may be moderate, credit metrics in the textile sector are likely to weaken further, in S&P Global Ratings’ view.

Fibre2Fashion News Desk (HU)