Chances of 50 per cent tariff has exporters seeking new destinations.
US orders already slowed or paused due to tariff hike concerns.
Tiruppur, Coimbatore employ 10 lakh, export Rs 45,000 cr annually.
As India’s textile industry braces for the impact of steep United States tariffs, exporters and industrialists in Tiruppur and Coimbatore are pinning their hopes on ongoing trade negotiations between the two countries. With a potential 50 per cent tariff looming, many say orders from US buyers have already slowed or been put on hold.
Several industrialists told Outlook that if Washington follows through with the promised additional 25 per cent tariff hike later this month, it would amount to an effective embargo on Indian goods, rendering them uncompetitive in the American market. While some are exploring alternative destinations for their products, they acknowledge that breaking into new markets is a formidable challenge.
In Tiruppur, India’s knitwear capital, exporters face an uncertain future. With the 25 per cent additional tariff set to be imposed by the US later this month already reflecting in orders from the country. The mood here is very subdued. Even as factory owners and exporters explore the possibilities of finding new markets, they know it will be a huge challenge.
"Whether they impose a 50 per cent tariff or a 500 per cent tariff, there is no difference, because we can’t bear the burden. And shifting markets will be challenging, as most companies are tuned to sell to the US market,” Coimbatore-based industrialist Ravi Sam told Outlook. Sam is also the former president of the Tamil Nadu chapter of the Confederation of Indian Industry.
"We have invested in and established production lines for the US market. So, we can’t pack the bags and leave overnight. Seventy per cent of the bedsheets exported from India go to the US market. Fifty per cent of bath towels the US imports are from India," Sam says. Once the exporters find new markets, it will be very difficult to recoup on the lost US market space. Therefore, traders and manufacturers are trying to keep the hope alive that trade negotiations will settle the issue. "The exorbitant tariff will have a debilitating effect on the US economy [too] in the medium and long run,” Sam says, referring to the inevitable price hikes that will result from higher tariffs.
The textile sector in Tiruppur and Coimbatore collectively employs more than 10 lakh workers and exports garments and other textile items worth Rs. 45,000 crores annually.
Ironically, 2024-25 marked the beginning of an upward trend for textile exports because in the previous two years, the demand was not at expected levels due to several factors including the war in Ukraine. In 2024-25, in Tiruppur, textile exports registered a growth of 15 per cent. The mood was upbeat due to the Free Trade Agreement (FTA) with the United Kingdom and the prospect of an agreement with the European Union (EU).
But the sudden announcement by US President Donald Trump of an additional tariff on Indian imports has dampened spirits. "Though it will take two or three weeks for the impact to start reflecting, some customers are already pausing their orders,” says N Thirumurugan, chairman of Estee Exports India Private Limited, a garment exporter. He tells Outlook that exporters hope that the US and India will reach a trade agreement before it is too late. "Otherwise the situation will go out of control, affecting the lives of lakhs of people,” he says.
Though uncertainty prevails, some exporters Outlook spoke to expressed confidence that the current impasse will be over in six months.
“It is a fact that there is uncertainty. Once the US fixes the tariff for all major countries, industry will adapt to the change. I don’t expect the 50 per cent tariff to be imposed (as) it will affect the US also. It is impossible for the US to find out alternative markets (for imports) immediately," says Sabu J Jacob, managing director of Kitex Garments Ltd.
He acknowledges that once the tariff is hiked, the [profit] margins of Indian exporters will fall. He adds that his company was completely dependent on the US market until last year, but in just one year, it reduced US dependency by nine per cent. "So, exploring other markets is an option. The FTA with the UK is already on, and an agreement with the EU is expected soon, which will help India tide over the crisis in six months. Short-term consequences will be felt, but this is a transitory phase," Jacob says.
As uncertainty looms, exporters hope the government will reach an agreement with the US soon, especially that Prime Minister Narendra Modi’s visit to the US next week will help break the deadlock.
