Indian garment manufacturers are reeling from the impact of steep US tariffs, with major exporters like Pearl Global facing pressure from clients to absorb the costs or shift production abroad.
Pearl Global, which counts US retail giants Gap and Kohl’s among its customers, has been fielding urgent calls from buyers demanding a solution after Donald Trump’s tariff salvo on India this week. The company, according to a Reuters report, is now offering to reroute orders to its 17 factories across Bangladesh, Indonesia, Vietnam and Guatemala to sidestep the punitive levies.
“All the customers are already calling me. They want us to shift from India to the other countries,” the managing director, Pallab Banerjee said.
Until recently, India was seen as an emerging force in the $16 billion global apparel export market. In April, the US had proposed tariffs on India that were lower than those on competing Asian hubs, giving Indian exporters hope of a strategic advantage. But the situation has dramatically reversed following escalating diplomatic tensions between New Delhi and Washington.
India now faces a 50 percent US tariff on garment exports — made up of a 25 percent duty that came into effect on Thursday and another 25 percent due on August 28, reportedly as a penalty for continuing oil purchases from Russia. In contrast, Bangladesh and Vietnam face just 20 percent tariffs, while China faces 30 percent.
Pearl Global, which derives about half of its business from the US, has received offers from clients willing to continue sourcing from India if the company shares the tariff burden. But such arrangements are not financially feasible, Banerjee said, without naming the firms.
The new tariffs have triggered panic among exporters in key Indian garment hubs such as Tiruppur, with many reporting cancelled or paused orders and clients exploring alternative sourcing locations, including lesser-known markets like Ethiopia and Nepal.
New Delhi has described the US tariffs as “extremely unfortunate”, as they threaten to undermine Prime Minister Narendra Modi’s flagship “Make in India” initiative. While some diversified companies like Pearl Global have offshore facilities to fall back on, exporters dependent on Indian factories are expected to suffer greater losses.
RichaCo Exports, which has shipped $111 million (approximately ₹930 crore) worth of garments to the US this year, relies entirely on its Indian production base. Around 95 percent of its India revenues come from US orders, according to general manager Dinesh Raheja.
“We're exploring setting up a manufacturing base in Kathmandu,” Raheja said. “The industry is in the doldrums.”
The crisis is spreading beyond apparel. Titan, India’s biggest jeweller and watchmaker, said this week it was evaluating the option of shifting manufacturing to the Middle East to preserve tariff-free access to US markets.
Amit Agarwal, CFO of Indian textile major Raymond, said the company is eyeing increased output from its factory in Ethiopia, where tariffs remain at 10 percent. “We could add more lines within three months to cater to US clients,” he noted.
Earlier this year, exporters in Tiruppur — India’s knitwear capital and home to nearly a third of the country’s apparel exports — had expressed optimism about India’s growing role in global supply chains, especially amid political instability in Bangladesh and efforts to diversify away from China. That sentiment has now given way to anxiety.
“Some of our customers have asked us to hold orders. Others are trying to get shipments out before the full 50 percent tariff takes effect,” said Naveen Micheal John, executive director at Cotton Blossom India.
N. Thirukkumaran, general secretary of the Tiruppur Exporters Association, said some garments from the region cost US clients as little as $1 with T-shirts priced between $3.5 and $5. These will now face steep tariff hikes, threatening to make Indian goods uncompetitive.
“In one instance, an importer who had ordered underwear told us to pause the process if we haven’t already purchased the yarn,” said John.
As exporters scramble to mitigate the fallout, the sudden turn in US-India trade relations has upended India’s ambitions of becoming a reliable sourcing hub for global retailers — and left its garment industry in a precarious position.
