Although Indian exporters were relieved to see lower tariffs compared to those imposed on other garment-exporting countries, an immediate disruption in exports and production has already begun. An exporter from Ludhiana told Fibre2Fashion that all US export orders have been put on hold by importers, who are asking suppliers to share the additional tariff burden.
Another exporter from Panipat said that the exporters cannot refuse such demands, as they are unable to sell their already manufactured garments elsewhere. There is also a fear of losing future orders if they decline to offer additional discounts.
Indian garment exporters are facing immediate disruption due to a 26 per cent US tariff hike effective from April 9, 2025.
US buyers are asking their Indian suppliers to share the tariff burden via discounts, which will squeeze margins.
At present, orders are put on hold, and future demand is uncertain.
Exporters may face stiff competition if competing countries secure tariff concessions.
Mithileshwar Thakur, Secretary General AEPC told Fibre2Fashion, “US buyers are asking Indian exporters to share half the burden of the new 26 per cent tariff. As exporters ship garments on an FOB basis, the tariff burden falls on the importers. However, being large retail giants and global brands, they have significant influence over suppliers. Indian exporters, therefore, cannot ignore their demand to share the extra burden.”
He added that ultimately India will emerge as a winner in garment exports to the US. However, exporters will face immediate disruption once the tariff comes into effect on April 9. Thakur mentioned that AEPC is regularly collecting feedback from garment exporters and providing updates to the Central government.
Sanjay K Jain, Chairman ICC National Textiles Committee and Managing Director, TT Ltd told F2F, “Due to 26 per cent additional tariff, Indian garment exporters may have to face the immediate pain of a slowdown in exports to the US. It is also likely that exporters will have to bear part of the additional cost of the new tariffs. Importers may pass on a portion of the cost to consumers after absorbing what they can afford.”
He added that after the implementation of the new tariffs, new orders are unlikely to come for some time, as buyers will renegotiate supply prices. He predicts that exporters may face sluggish demand for at least a few months.
Regarding diversion of export orders from other countries, Jain said it is more likely that orders will shift from China. “Countries like Bangladesh, Vietnam, Cambodia, and Thailand are negotiating hard with the Trump administration for lower duties. If they secure concessions for garment exports to the US, they will pose strong competition to Indian exporters.”
Downstream industries such as fabric, dyeing, and yarn manufacturing may also feel the impact of the US tariffs. A yarn trader from Delhi said that manufacturers will negotiate raw material purchases more aggressively to adjust for the additional burden. However, players with comfortable margins may agree to offer discounts.
Fibre2Fashion News Desk (KUL)
