The Indian textile industry is facing a crisis after the United States doubled the tariff on clothing imported from India. Major American companies have put orders on hold, raising concerns about a 40-50% decline in exports. Countries like Bangladesh and Vietnam could gain a competitive advantage from this.
Garment export: On August 6, 2025, the US government increased the import duty on textiles imported from India from 25% to 50%. Following this, major companies like Walmart, Amazon, and H&M have halted new garment orders from India. The US is the largest export market for the Indian textile industry, making this decision a major blow to the industry. According to experts, this decision could reduce India's exports by 40-50%, while Bangladesh, Vietnam, and China could benefit.
America's Decision and Its Impact
The US President's decision to increase import duties on India is proving to be a disruptive move for the global supply chain. The US imports the most textiles and apparel from India, but the tariff hike will increase costs for companies there. Therefore, companies have currently instructed not to send new orders to Indian suppliers.
E. Vishwanathan, President of the Buying Agents Association, stated that American buyers have put a stop to all types of billing and negotiations. Most companies are trying to ship previously placed orders before August 27, so that the goods reach buyers before the increased duty is applied.
Lack of Stability in the Business Environment
There is a deep sense of uncertainty in the Indian textile industry following this decision. According to Sabu M. Jacob, Managing Director of Kitex Garments, companies have not canceled orders, but all orders are currently on hold due to the inability to determine prices with the increased duty. He stated that neither production nor supply is possible until the situation becomes clear.
The US has imposed relatively lower import duties on countries like Bangladesh, Vietnam, Indonesia, and Cambodia compared to India. While Bangladesh and Vietnam have a 20% duty, it has reached 50% for India.
Importance of the American Market
The US has been the largest and most profitable market for India's textile industry. Between January and May 2025, India exported $4.59 billion worth of apparel to the US. This is 13% more than in 2024. This figure could reach $10.8 billion in the entire year of 2025, but a sharp decline is now expected.
The textile industry is not only a major source of employment for India, but also a major means of earning foreign exchange. In such a situation, if this crisis persists for long, its impact could be seen on the entire economic system.
Demand for Government Intervention
Textile exporters have demanded immediate intervention from the central government. They want India to try to reduce or postpone the duty by holding talks with the US at the diplomatic level.
In addition, the government is also being advised to provide relief to domestic production and exporters in the form of subsidies, tax refunds, and easy loans, so that they can remain competitive internationally.
