Mumbai: Just as Indian apparel factories began production for the next US fall-winter season, a looming threat of a 500% tariff risks derailing capacity utilisation.
“Buyers who were earlier considering shifting some orders to India no longer want to come. They have started writing to us, asking what happens if this 500% tariff is imposed, who will take the guarantee,” said Vijay Agarwal, chairman of the Cotton Textiles Export Promotion Council.
The industry is already under pressure after the US imposed 50% tariffs on India last August, marked by deep discounts, diversion of idle capacity to domestic brands and rerouting of export orders through neighbouring countries. On Wednesday, US senator Lindsey Graham said President Donald Trump has given the go-ahead for a Bill proposing 500% tariffs on countries that continue trading with Russia.
India exported apparel and textiles worth $37 billion in the 2024-25 fiscal year, with the US accounting for 28-30% of the total. Since the US imposed 50% tariffs on Indian goods, the industry has been struggling to stay afloat. According to the Confederation of Indian Textile Industry, during April-November 2025, apparel exports grew marginally by 2.28%, while textile exports declined by 2.27%.
“The situation remains highly uncertain as far as US tariffs are concerned. But we still have to manufacture the goods. We will have to take the risk,” Agarwal said.
“We offered deep discounts to keep exports going, hoping the issue would be resolved soon,” said Rajat Jaipuria, MD of Kolkata-based Rajalaxmi Cotton Mills, which employs around 8,000 people.
“We have now started production for fall season orders. However, a 500% tariff would effectively amount to an embargo,” Jaipuria said. “We are unsure how factories can continue operating if exports to the US stop.”
For the fall season, US buyers have already begun exploring alternatives to Indian exporters.
Tiruppur, which accounts for nearly 90% of India’s knitwear exports, is already seeing signs of stress, say industry executives.
