In the bustling textile hubs of Tamil Nadu, a sense of crisis has swept across factory floors and executive offices alike. The cause? A sudden and staggering 50% tariff imposed by the United States on Indian knitwear and apparel exports, announced on August 6, 2025, by President Donald Trump. For an industry that had only recently been brimming with optimism, the move has landed like a thunderclap, threatening both livelihoods and the very future of India’s garment sector.
Just months ago, the mood in places like Tiruppur, Coimbatore, and Karur was buoyant. According to The Indian Express, exporters had been gearing up for a rebound in US orders, hopeful that the India–UK Free Trade Agreement and high tariffs on Chinese and Myanmar goods would give Indian products an edge. Many companies invested heavily in new machinery, betting on a surge of American demand.
But all that changed overnight. The new US tariffs, which began with a 25% hike in late July and will double to 50% by August 28, have left Indian exporters reeling. Orders are being paused, redirected, or outright lost to competitors in Bangladesh, Pakistan, Vietnam, and Cambodia—countries where US tariffs remain far lower, ranging from 19% to 36%. For some knitted garments, combined duties now reach a punishing 64%, making Indian products up to 35% pricier than those from regional rivals.
“This is a setback,” said K M Subramanian, president of the Tiruppur Exporters’ Association, in an interview with The Indian Express. “Standalone exporting companies will be hit first. Buyers are already asking us to absorb part of the tariff. Our margins are just 5% to 7%; how can we share this cost?”
The numbers paint a stark picture. Tamil Nadu’s textile belt, which includes Tiruppur, Coimbatore, and Karur, collectively employs over 1.25 million workers and exports garments worth Rs 45,000 crore annually. Tiruppur alone accounts for Rs 40,000 crore in knitwear exports, supplying global giants like Walmart, GAP, and Costco, and representing 55% of India’s knitwear exports. The region had hoped to grow exports by 10–15% in the 2025–26 fiscal year. Now, analysts predict a 40–50% drop in US-bound orders, particularly for cotton and knitted apparel.
The fallout is already being felt. Pearl Global, one of India’s largest garment exporters, has been inundated with urgent calls from US clients. “All the customers are already calling me. They want us to shift from India to other countries,” said Pallab Banerjee, Managing Director of Pearl Global, as reported by Reuters. The company operates manufacturing facilities in Bangladesh, Indonesia, Vietnam, and Guatemala—nations currently exempt from the new US duties. Retail titans like Walmart, Amazon, and Target have reportedly halted new orders from India, pressing suppliers to relocate or risk losing their business entirely.
For exporters without international operations, the impact is even more acute. RichaCo Exports, which ships nearly $111 million worth of garments to the US each year, finds itself cornered. “We’re exploring setting up a manufacturing base in Kathmandu,” said General Manager Dinesh Raheja. “The industry is in the doldrums.”
Even India’s largest jeweler and watchmaker, Titan, has revealed plans to relocate some operations to the Middle East to maintain access to the US market. Meanwhile, Raymond is banking on its Ethiopian unit—where tariffs are just 10%—to ramp up production. The message from buyers is clear: move production or lose orders.
Tiruppur, often hailed as India’s knitwear capital and responsible for nearly a third of the country’s apparel exports, has been hit especially hard. “An importer that had ordered underwear told us to stop if we haven’t purchased yarns yet,” said Naveen Micheal John, executive director at Cotton Blossom India. Many suppliers are racing to ship whatever they can before the full weight of the tariff hits. With basic garments like T-shirts priced at $3.50–$5, the 50% levy could wipe out any remaining competitiveness.
“We’re facing one of the biggest challenges in recent history,” admitted N Thirukkumaran, general secretary of the Tiruppur Exporters’ Association. The pain isn’t limited to garments. In Coimbatore and Karur, known for home textiles, order stagnation has set in. “We’re hearing ‘hold on’ from clients who had placed advance enquiries,” said K Selvaraju, secretary general of the Southern India Mills’ Association. “If we miss this window, we miss the season.”
The jobs at stake are significant. If exports contract by 10–20% due to lost orders, it could threaten 100,000 to 200,000 textile and garment jobs in the three hubs over the coming months. Karur alone exports nearly Rs 9,000 crore in home textiles annually, with Rs 6,900 crore as direct exports; Coimbatore mills export large volumes of cotton towels and kitchen linens to the US, now burdened by higher duties.
Comparisons with regional competitors only sharpen the sense of injustice. Bangladesh faces an effective rate of 35–36%, Pakistan just 19%, Vietnam 20–21%, and Cambodia, after a recent revision, 19%. “Their 20% rate means they’re much cheaper, significant when your margin is about 5%,” Subramanian explained. With total duties on Indian goods touching 64%, non-branded US buyers are already shifting to cheaper options. “They shift overnight,” he warned.
To make matters worse, India’s own tax regime is compounding the problem. “Polyester raw material is taxed at 18%, yarn at 12%, but finished garments are taxed at 5%. This adds 6-7% to export costs, while competitors don’t have such inverted duties,” Selvaraju noted. He also pointed out that the 11% import duty on cotton and quality concerns with Brazilian imports—now 45% of inbound shipments—are further eroding competitiveness.
Industry leaders are urging the Indian government to step in with policy relief. “The government had then provided an extended credit guarantee-linked scheme,” Selvaraju recalled, referencing pandemic-era support. “It’s time to bring that back.” He also pressed for eliminating the cotton import duty and restructuring the GST regime on manmade fibres. “For our exports to remain viable, tax on all raw materials must be below 5%.”
The consequences of inaction could be dire. Indian suppliers risk losing permanent ground to Bangladesh, Cambodia, Vietnam, and Pakistan, all of whom now enjoy cheaper landed prices in the US. The ripple effect—order shrinkage, idle capacity, and job losses—is already underway. “The US market still wants to buy from us,” Selvaraju insisted. “They like Indian cotton, the Indian make. But political and policy hurdles are pushing them away.”
New Delhi has condemned the tariffs as “extremely unfortunate,” but with the second phase of the hike looming, exporters say immediate relief is unlikely. As garment factories across India brace for mass cancellations and production suspensions, the next two to three weeks are seen as decisive. “We haven’t seen cancellations yet, but the tone is changing. Everyone’s cautious,” said Ramdas, a mid-sized factory owner in Tiruppur.
Yet, amid the uncertainty, some exporters hold out hope that pressure from major US brands—worried about higher retail prices—might eventually force a rethink in Washington. “We got through Covid. We will get through this,” Subramanian said. “We are talking to the Central government. We are urging negotiations with the US.” Whether that hope materializes, or India’s textile powerhouses are forced to shift production abroad, the coming weeks will prove pivotal for an industry now hanging by a very fine thread.
