For nearly three months now, R Gopalakrishnan, chairman of Royal Classic Mills (P) Ltd, has been waking up to the hope shared by exporters across India’s textile sector — that Washington will roll back the punitive 50 per cent tariff on Indian textiles. The wait, however, has stretched on. “Both the governments are trying hard to announce a breakthrough. However, we have been unlucky so far,” he says.
Not only have exporters in Tiruppur lost orders worth nearly ₹Rs 15,000 crore since the new US tariffs took effect on August 27, there has been a 30 per cent reduction in production capacity, which has prevented a large chunk of the migrant workforce from Bihar, Odisha and West Bengal from returning to work after the Diwali holidays. Indian textile and apparel exporters, including those in Tiruppur, are under growing strain as punitive US tariffs continue to choke orders, squeeze margins and disrupt production nationwide. With exporters absorbing a significant share of the tariff burden and buyers diverting sourcing to competing countries, industry leaders warn that sustained pressure could hit employment at home and lead to higher prices for US consumers as early as 2026.
Gopalakrishnan, whose company earns nearly 55 per cent of its revenue from the US, says, “Nearly 32 per cent of exports from Tiruppur is to the US and the rest to other markets like Europe, Japan, Australia and West Asia. The exposure of units varies between 20 per cent and 100 per cent. The larger the exposure to the US market, the bigger the impact.”
Booking losses
The Apparel Export Promotion Council (AEPC), a pan-India body of apparel exporters, says that textile exporters in India have been clocking a loss of ₹45 crore every day for the last 90 days, after the 50 per cent tariff took effect. “Exporters are being forced to shell out money from their pockets. This could range from 15-18 per cent of the total FOB (Free on Board) value,” said Sudhir Sekhri, chairman of the Apparel Export Promotion Council (AEPC). This FOB is the total cost of getting textile goods ready and to the buyer’s designated vessel at the exporter’s port, and includes ex-factory price, domestic transport, warehousing and loading.
“If you consider our textile and apparel exports, we have been losing ₹45 crore every day since the last three months. It is a huge drain,” Sekhri said. The AEPC official said though exporters are looking to diversify and tap other countries, the move could take time and employment in India could be adversely affected during the interim.
For Raft Garments that manufactures innerwear, the tariff burden is getting difficult to manage. “When the US announced the first tariff hike, they wanted us to share 16 per cent of that. We shared it. However, when they hiked it again, they wanted us to share 25 per cent of that increase. This is not possible for us to share,” says Siva Subramaniam, Founder & Chairman of the company, 50 per cent of whose revenues come from the US market. “We are going through a tough time with clients cancelling orders. We got an order of 2 million units to be supplied by February. We supplied half-a-million before Diwali. In September-November when the tariff hike was implemented, we could not afford the increase in share; the clients cancelled the rest of the order and diverted it from countries like Bangladesh, Cambodia, and Vietnam,” he added.
Price tags on Indian products to rise
India’s largest textile exporters, including Welspun Living, Arvind Ltd and Gokaldas Exports, did not respond to emailed questionnaires, but have flagged concerns over US tariffs in discussions with investors. The concerns include Indian textiles and apparels becoming costlier in the US market. According to APEC, the price tags on Indian products sold in the US market are expected to see a rise in the 2026 Winter season, export shipments for which will leave Indian shores in April of next year. However, Gokaldas Exports, which is one of the top five textile exporters to the US, feels that the price rise could hit the US as early as Spring 2026.
“Going forward, there will be price increases, which will be passed on to the customers. Most of that will happen from spring ‘26… Demand is very price sensitive. And if a 4-6 per cent price increase is passed on to the consumers, which is most likely to happen, I think there could be some degree of demand contraction,” Sivaramakrishnan Ganapathi, vice-chairman and managing director of Gokaldas Exports, told investors last month. Welspun Living, too, felt that while customers are sharing the “tariff burden,” partial absorption of tariffs is likely to weigh on margins this fiscal year, and the company expects US consumer demand to weaken during the current holiday season and beyond.
There have been some exporters who have been successful in cutting down on discounts. According to Pravash Agarwal, director of Kolkata-based Maasis Interfashion that exports women’s apparels to the US, the company was forced to offer a 20 percent discount to customers in October, which in turn adversely impacted its margins. However in the new orders received, the company has no offered any discounts.
Ahmedabad-based United Polyfab Gujarat Ltd said only a portion of the tariff is being passed on to the customers, while a significant part is still being absorbed by exporters to retain customers. “The impact of the tariffs have started becoming visible and if an Indo-US deal does not materialise, the pressure could continue into 2026. There is already a slowdown in US-linked orders, especially in garment-related segments,” said Ritesh Hada, director of the company, that exports to the US through intermediary trading entities. Another exporter who did not wish to reveal his identity, said his company managed the last 90 days with orders in hand for delivery. However, there is a lot of uncertainty, with orders not coming from the US. Some of the clients have diverted their sourcing to other countries like Bangladesh, Vietnam, Sri Lanka and Thailand. “We seem to be in for a long haul,” he remarked.
