Textile Exporters Warn Of Job Losses Staring At 25% US Tariffs

New Delhi, Aug 2 (KNN) The United States’ decision to impose a 25 percent tariff and additional penalties on Indian imports has triggered alarm across India’s textile and apparel industry, with exporters warning of major disruptions, including below-cost sales and potential mass layoffs in one of the country’s largest employment-generating sectors.

The move puts India’s USD 37-billion textile and apparel export industry at a significant disadvantage compared to regional competitors such as Bangladesh, Vietnam, and Indonesia—nations that continue to enjoy lower US import duties.

“We are on a very sticky wicket now. Exporters have their backs against the wall and may be forced to sell at a loss just to keep operations running and avoid mass layoffs,” said Sudhir Sekhri, Chairman, Apparel Export Promotion Council (AEPC), as quoted by Financial Express.

India, the world’s sixth-largest exporter of textiles and apparel, shipped USD 36.6 billion worth of goods in FY25. 

The sector employs over 45 million people directly, with nearly 80 percent of production rooted in Micro, Small and Medium Enterprises (MSMEs).

The US is India’s largest market for textiles and apparel, accounting for USD 10.7 billion—or 29 percent—of the sector’s total exports in FY25. 

The new tariff regime has cast doubt on India’s ambitions to expand its market share in the US, which currently stands at 6 percent.

Under the revised US tariff structure, India faces a 25 percent levy, while Bangladesh, Vietnam, and Sri Lanka are subject to 20 percent, and Cambodia 19 percent. 

China was notably excluded from Friday’s announcement amid ongoing trade talks with the US. A temporary 90-day tariff truce between the two nations is set to expire on August 12, after which China could face an additional 30 percent duty if negotiations break down.

The US accounted for 33 percent of India’s ready-made garment exports in 2024, and India’s share of US RMG imports has risen from 4.5 percent in 2020 to 6 percent in 2024. 

Despite this progress, India remains behind China (21.9 percent), Vietnam, and Bangladesh, which together contributed nearly half of US apparel imports last year.

While India recently signed a comprehensive free trade agreement with the UK, industry representatives say benefits may take months to materialise. 

“Implementation is still at least four months away. Meanwhile, we’re in the peak buying season—Spring-Summer 2026 orders are being placed now for delivery starting December,” Sekhri added.

He warned that once international buyers shift sourcing to other countries, regaining lost business can be difficult. “It’s not that orders will stop completely, but the terms will be tougher, and margins will be eroded,” Sekhri said.

(KNN Bureau)