Indian textile exporters under stress amid festive demands due to US tariffs and weak demand: Report

Indian Textile Sector Faces Tough Times from US Tariffs and Weak Demand

The Indian textile industry is hitting a rough patch, especially with the upcoming festive season. A new report from Systematic Research points out that high demand from the US is taking a hit due to 50 per cent tariffs and sluggish sales. This makes it super tough for Indian manufacturers to hike prices and stay competitive.

If these steep US tariffs stick around, big retailers might push suppliers to cut deals, forcing Indian exporters to swallow a big chunk of the extra costs. The US is a major player in India’s ready-made garments (RMG) exports, making up 8-10 per cent of the revenue. But these tariff hikes could slow down growth in FY26, as orders get squeezed and prices drop for Indian suppliers.

Adding to the woes, Indian exporters are up against fierce competition from neighbors like Bangladesh, which enjoy lower tariffs in the US market. Weak demand in the US isn’t helping either—it’s getting harder to pass on higher prices. There’s also uncertainty around stock levels at giants like Walmart and Target, though things looked a bit better in July. Keep an eye on October’s festive restocking; it could make or break the season.

That said, not all hope is lost. Other countries can’t easily step in for India right away because of their limited production capacity. Plus, India shines in high-value areas like fashion apparel, fancy embellished clothes, and tricky stitching styles—spots where rivals like Bangladesh and Vietnam struggle to keep up.

India’s strong supply chain and quick delivery options also keep US brands loyal, even when demand dips. This helps maintain ties in challenging times.

Despite the US tariff blow, the Indian RMG industry shows real resilience, thanks to booming domestic demand. The home market drives 70-75 per cent of revenues, acting as a solid shield against global shocks.

What’s fueling this? Rising spending on clothes, backed by steady economic growth, easing inflation, friendly interest rates, and recent GST cuts on affordable garments. Early signs from FY26 show strong sales and production, pointing to a vibrant consumer scene.

Overall, while US tariffs will pinch RMG margins a bit—exporters and retailers sharing the load—the sector looks set to bounce back, powered by India’s internal strengths.

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