“Everyone was switched into panic mode on Thursday, looking for immediate solutions when they heard about the tariffs for India. When it was discussed after seeing the tariff range, we reached a level of solace—that at least we were better off compared to others,” Raja Shanmugam, former president of Tirupur Exporters Association told Sourcing Journal.
The solace being that the levies on India are less than its immediate neighbors—with a 27 percent duty; Bangladesh is 37 percent, Sri Lanka 44 percent, Vietnam 46 percent, Cambodia 49 percent, Pakistan 29 percent and China at 34 percent.
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There appears to be promise for the longer term, he said. But there were a lot of variables to negotiate on the way there.
“In less than a week, the duties will more than double,” a manufacturer from Tirupur explained, “and who is going to pay for the shipments that are already on the way? How will the extra tariff be handled as this goes up on Wednesday?” While duties vary for different segments, many of the small and medium players who export largely cotton based products pay an approximate 12 percent.
Sudhir Sekri, chairman Apparel Export Promotion Council (AEPC) told Sourcing Journal, “Buyers have already started asking for discounts ranging from 15 to 20 percent while the typical margins are just from five to six percent. How can this work?”
One of the solutions that has been offered by the AEPC is for the textile ministry to implement a zero-for-zero duty policy which eliminated duties on textile products from the U.S., encouraging reciprocation. This is similar to what Vietnam has been reportedly offering.
The “how-where-what” questions are being bandied about as manufacturers have been reaching out to each other with urgency, as well as to the trade bodies, to find answers.
While announcing the tariffs, President Trump underlined the friendship with Indian Prime Minister Narendra Modi. “The prime minister just left. He’s a great friend of mine. But I said, you’re a friend of mine, but you’re not treating us right. They charge us 52 percent.”
The commerce ministry has thus far reacted cautiously, describing the tariffs more simply as “a mixed bag” and stating that it is “carefully examining the implications of the various measures,” and “studying the opportunities that may arise due to this new development.”
Meanwhile, economists are calling it a moment of “strategic recalibration.” In 2024, India exported textile and apparel products worth $10.5 billion to the U.S., accounting to about 28.5 percent of India’s total textile and apparel products to the world. It is a chance to step up, think bigger and grow more quickly given the fact that India offers the entire value chain.
“It is crucial for the Indian industry to closely monitor the responses of competing nations. Some competitors of the textile value chain are likely to announce a zero-tariff policy for exports to the USA. This evolving trade landscape would reinforce the need for India to engage proactively with US authorities to negotiate a more favorable tariff regime,” said Rakesh Mehra, chairman, Confederation of Indian Textile Industry (CITI).
The comparisons are on.
“While it seems favorable to India, it will be important to see how this cost increase is adjusted. In the past a large part of such cost escalation had to be borne by the suppliers. With such a steep increase, the entire cost cannot not be passed on to the consumers and hence the importers will look for more cost competitive sourcing. Countries with better logistic and supply chain efficiencies will have a better capacity to retain relative cost competitiveness,” said Mehra.
“A significant scenario”, observed Ankit Jaipuria, co-founder, ZYOD a rapidly growing tech-enabled fashion manufacturing firm, adding that, “in the near term, U.S. demand may soften as brands work through existing inventories and adopt a ‘wait-and-watch’ approach amid policy uncertainty.” He noted that India is relatively better positioned than its peers.
As far as market share, some of the bigger companies have a higher percentage of export revenue from the U.S, including Trident Arvind, KPR Mill, Vardhman, Page Industries, Alok Industries, Raymond—ranging from 20 to 40 percent, while others have been paying careful attention to the diversification dialogues of the past two years. As buyers have been looking at diversification from sourcing countries, so have the exporters.
Smaller companies are calling for a stimulus package, and for the government to take policy measures for protection.
In Tirupur, which accounts for more than a quarter of India’s total apparel exports, Raja Shanmugam said that the recovery after “two years of dullness” had really been gaining momentum.
“Bangladesh, Vietnam, Cambodia, Sri Lanka, all the competing areas have been taxed heavily, and it could give Tirupur a chance to grow further. Moreover, Bangladesh has been facing political difficulties, and this has reflected on the trade. It is a very precarious situation for many countries. At this time, the trouble for India is mostly temporary about negotiating with buyers for the present shipments and this can be negotiated—but for the future there are a lot of opportunities to improvise. We would have to scale up our facilities and increase volumes if things go that way,” Shanmugam noted, cautioning like most other analysts that the fall out of the tariffs would be a lowering of consumer demand.
Another manufacturer in Madurai, who has scaled up—opening two factories over the last year and a half near the Madurai region, put it succinctly: “The feedback from our buyers is that they are checking with their logistics situations and assessing, so it is early to come to any conclusion. Everyone is watching and looking for opportunity—and the basic point is that certainly that appetite to grow is there. We will just have to see how much this situation changes the consumer appetite to buy in the U.S.”
