Indian Garment Exporters Diversify Markets Amid US Tariff Uncertainty

New Delhi, Nov 11 (KNN) Indian garment exporters are reducing their dependence on the US and expanding into Europe, the UK and domestic markets amid tariff-related disruptions and uncertainty over future trade relations with Washington.

According to a Reuters report, companies are diversifying export destinations, exploring new markets and shifting manufacturing to lower-cost locations.

Orient Craft, which supplies British retailers Next and Marks & Spencer, has sharply reduced its US exposure following tariff increases announced by US President Donald Trump in April 2025.

The US now accounts for less than 10 per cent of the company's sales, down from 84 per cent before the tariff changes. Founder Sudhir Dhingra said the company had shifted business towards Britain, Europe and, to a lesser extent, India.

He said US buyers had cancelled orders or demanded discounts after the tariff announcements, with some seeking to pass on part of the additional duty to manufacturers despite their limited margins.

Gokaldas Exports, which employs over 53,000 people, is also expanding its European business.

Managing Director Sivaramkrishnan Ganapathi said the company aims to raise Europe's share of revenue to 25-30 per cent over the next three to five years from 15-16 per cent currently. Its US market share is expected to decline to 35-40 per cent from 50-55 per cent.

Garment Exporters Diversify Markets Amid US Tariff Uncertainty

According to the Global Trade Research Institute, India's textile, apparel and home-furnishing exports to the US declined 9.8 per cent to USD 4 billion during April-August, while shipments to other markets grew 3.7 per cent to USD 15.2 billion.

The US share of India's total exports also fell to 25.4 per cent in August from 28.3 per cent in 2022, industry estimates show. Amid tariff uncertainty, rising shipping costs and US buyers' demands for discounts, exporters are expanding into the UAE, UK and European Union.

The India-UK trade agreement, effective July, grants duty-free access to Indian clothing exports, while a proposed EU trade pact could remove existing duties of 12-17 per cent.

A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC), identified Germany, France, Italy and the Netherlands as key target markets.

Manufacturers Explore Lower-Cost Production Locations

Garment manufacturers are also shifting towards lower-cost locations to improve production efficiency.

Ranchi in Jharkhand is emerging as a manufacturing hub, supported by government subsidies, easier land access and an educated workforce.

Gokaldas Exports operates two factories in Ranchi and plans to establish a third, potentially generating up to 4,600 additional jobs.

The company estimates that its Ranchi operations offer at least 10 per cent higher efficiency than other manufacturing locations.

Domestic Market Offers Additional Growth Opportunities

Manufacturers are also exploring India's domestic apparel market, estimated at USD 150 billion and growing 7-8 per cent annually, to offset export demand uncertainty.

Chandrima Chatterjee, Secretary General, Confederation of Indian Textile Industry, said market diversification was becoming a structural strategy, particularly for exporters heavily dependent on the US.

However, exporters are not looking to exit the US market entirely, given its scale and established buyer relationships, but aim to reduce dependence and diversify their export base.

(KNN Bureau)