India’s knitwear hub Tiruppur, which employs nearly 9 lakh people across 2,500 factories, is reeling under a severe crisis as the impact of US tariffs begins to bite. Over the past two weeks, several exporters have shut down operations and laid off workers after American buyers either halted purchases or demanded steep discounts.
The crisis follows Washington’s decision to impose an additional 50% tariff on most Indian goods, effective 27 August 2025. For Tiruppur, which sends almost 34% of its annual ₹44,000 crore exports to the US, the fallout has been immediate and harsh.
With Christmas shipments—valued at nearly $2 billion annually—usually dispatched around September and October, exporters are now stuck with massive unsold inventories.
R. Rajkumar, MD of RRK Cottons India Pvt. Ltd., said: “I have five factories in Tiruppur and Palladam, employing 2,000 people. We are sitting on ₹60 crore worth of finished goods meant for the US. Two factories are already shut, and 1,000 workers have been laid off.”
He added that buyers, including Walmart, are demanding 20–25% discounts on present and future orders. Without fresh demand after November 15, he fears further shutdowns.
Other exporters echoed similar fears. One said he had closed one of his four factories, laying off 850 workers, with nearly ₹62 crore worth of goods hit. Another exporter, entirely dependent on the US market, has already shut down one factory employing 1,000 of his 5,000 staff, and is stuck with ₹70 crore worth of stock. He warned that if tariffs continue beyond January, his remaining factory may also close.
“The garment industry is labour-intensive and takes years to build,” the exporter said. “With Bangladesh, Vietnam, and Cambodia offering cheaper alternatives, we may lose buyers permanently unless the Indian government intervenes.”
The situation is also creating ripple effects across the supply chain. A US-based liaison officer in Coimbatore said that spinning mills in Dindigul have cut production and laid off staff, while ancillary industries such as carton box, packaging, and transportation are beginning to feel the pinch. Cotton farmers are bracing for falling crop prices as demand dips.
Raja Shanmugam, former president of the Tiruppur Exporters’ Association (TEA), estimated that ₹3,500 crore worth of orders are currently stuck. “Negotiations with US buyers are ongoing, but unless tariffs are rolled back or India secures a deal, the industry faces an existential challenge,” he warned.
Exporters say Europe, which absorbs only about 27% of Tiruppur’s output, cannot compensate for the US market’s scale. Many fear defaults on bank loans, with debt levels running into hundreds of crores.
Industry associations and exporters are now pinning their hopes on the government’s ability to negotiate better trade terms with the US to prevent widespread collapse of India’s garment export sector.
