US Tariffs To Dent Home Textile Sector; Revenue May Slip 5–10%
Profitability, credit metrics under pressure as 50% duty kicks in
India’s home textile industry is staring at a 5–10% drop in revenue this fiscal after the US imposed a 50% tariff on imports from August 27, 2025. The US accounts for nearly three-fourths of the sector’s export earnings.
CRISIL Ratings said the impact will be cushioned partly by frontloaded shipments, capacity constraints in rival markets like China, Pakistan and Turkey, and ongoing efforts by Indian players to diversify exports.
“Home textiles are discretionary products. The US exports grew only 2–3% in Q1 as retailers stayed cautious amid inflation. Orders surged ahead of the tariff deadline, but India’s competitive edge should keep the revenue decline to 5–10%,” said Manish Gupta, Deputy Chief Rating Officer, CRISIL Ratings.
Companies with higher US exposure will be worst hit. Exporters are expected to sharpen focus on the EU and UK, which together made up about 13% of exports last year. The UK market, in particular, is opening up following a recent free trade agreement.
But diversification will take time. “Operating profitability could drop by 200–250 bps this fiscal as exporters absorb part of the tariff and face weaker demand from the US. Oversupply risks may also hit margins in other geographies and the domestic market,” said Gautam Shahi, Director, CRISIL Ratings.
As a result, cash accruals are likely to fall, weakening credit metrics. Interest coverage could slip to around 4x from 5.4x last fiscal, while the Debt-to-EBITDA ratio is expected to deteriorate to 2.4–2.6x from 1.9x.
The industry’s trajectory will depend on whether US tariffs stay elevated, policy support from the Centre, demand trends in the US, and cotton prices, CRISIL said.
