Tariff Uncertainty Halts US$ 2 Billion In US Apparel Orders For India
Negotiations between Indian apparel exporters and US buyers have stalled, putting nearly US$ 2 billion in summer orders at risk. Exporters are hesitant to commit without clarity on the tariffs that will apply under the long-pending India–US trade deal, which was expected to be concluded by fall but remains unresolved.
With uncertainty persisting, major US importers are shifting orders to Bangladesh, Vietnam and China, all of which face significantly lower tariffs than India’s current rates of up to 50%. Industry sources warn that missing the summer season could have lasting consequences for India’s competitiveness.
One exporter said that even clarity on the possible removal of the additional 25% oil-related tariff would allow talks to resume. The uncertainty cuts both ways, the person noted.
The US is India’s largest textile and apparel market, with exports worth US$ 10.3 billion in 2024. But unlike other sectors, apparel shipments are struggling to find alternative destinations garment exports dropped over 6% in September.
An Indian Institute of Foreign Trade (IIFT) study estimates that a 50% tariff could slash US demand for Indian textiles and apparel by US$ 6.6 billion (–67.8%), with the biggest absolute hit in apparel and made-ups (US$ 5.7 billion). Even a 25% tariff could reduce demand by US$ 2.1 billion.
Competitors including China, Vietnam, Bangladesh, Pakistan and Mexico stand to gain market share due to lower duties.
Although 76% of India’s textile output feeds the domestic market, the tariff shock would still ripple through the supply chain. The IIFT report estimates indirect losses of US$ 4.6 billion, affecting both large exporters and smaller producers who rely on global e-commerce platforms.
