How India’s Garment Industry Is Hit by Trump’s Recent Tariffs
In recent months, the U.S. under President Donald Trump has sharply increased import tariffs on many Indian goods. The key move: an additional 25% tariff was added (on top of an earlier 25%) because of India’s continued import of Russian oil. As of August 27, 2025, certain Indian exports to the U.S. are facing a 50% tariff.
The domino effect:
Major sectors affected: textiles & garments, home textiles, gems & jewelry, footwear, furniture, shrimp & leather. Garment hubs like Tirupur, Noida, Surat have already seen orders halted, production lines paused, because the cost competitiveness has worsened significantly. Buyers are re-negotiating, delaying, or shifting orders.
Because U.S. is one of the largest markets for Indian garment exports, a very large chunk of export value is exposed. Estimates suggest that about 55-66% of India’s merchandise exports to the U.S. are now subject to the high tariffs. Garment/textile value in that exposed portion is substantial.
What Is The Export Impact Likely To Be?
Here are some of the measurable and projected effects:
Revenue decline: For home textiles, Crisis expects a 5-10% drop in revenue for the fiscal year due to these tariffs.
Operating margins are expected to shrink—ICRA projects apparel exporters may see margins drop by 200-300 basis points.
Loss of orders: Many exporters have reported orders being cancelled or diverted to other countries with lower U.S. tariffs (e.g. Bangladesh, Vietnam, Cambodia).
Job risk: Tens or hundreds of thousands of workers may face job losses in garment/textile hubs, especially MSMEs that cannot absorb the cost increase.
Share loss: India’s garments may become less competitive in the U.S. market compared to competitors who face lower tariffs. This could mean a loss of market share.
What Does the Future Look Like?
Given the scale of the tariff increase, the medium‐term outlook is challenging, but not without paths to adaptation.
Possible Scenarios
Diversification of export markets
India may try to redirect exports toward markets where tariffs are lower or where trade agreements are favorable (Europe, Southeast Asia, Latin America). Some exporters are looking at Nepal and other neighboring countries for production or transshipment.
Government support
The Indian government has already started some relief measures:
Suspending import duties on cotton temporarily to reduce input costs.
Planning export relief package for sectors hit by the tariffs.
Considering schemes to support MSMEs and labor-intensive industries.
Cost absorption and margin compression
For larger exporters, there may be attempts to absorb part of the tariff increase (via lower margins) or pass on some costs. But many small players have slim margins and may find this economically unviable.
Supply chain shifting
Some brands may shift part of production to countries with lower tariffs or better trade terms with the U.S. Exporters near or on the margin risk losing business because buyers are very price-sensitive.
Is There Any Relief Expected?
While nothing is guaranteed, there are signs that relief is possible, though likely gradual and partial.
Negotiations / diplomatic engagement are underway. India is discussing with U.S. officials, trying to make the case for tariff relief or exemptions.
The Indian government has already acted in some areas: cotton duty exemption until end-September, extension on import duties, etc.
Export promotion missions and support schemes are being planned to reduce the longer-term damage.
However, since the tariff increase is tied to policy decisions (like India’s purchase of Russian oil), relief may depend on shifting those underlying triggers or negotiating them. That could take time.
Key Takeaways
The 50% tariff is a big shock for the garment/textile industry in India, particularly to MSMEs, labour-intensive hubs, and export orders to the US.
Export revenues are likely to decline; margins will be squeezed; job losses are a real risk unless mitigated.
The future depends on how quickly India can: mitigate input costs, diversify exports, obtain government relief, and compete in efficiency and quality.
Relief is possible but likely to be piecemeal and contingent on both domestic policy changes and successful negotiation with the U.S.
