After US President Trump announced a 25% tariff on Indian goods starting this Friday, Indian garment and jewelry exporters are facing the risk of a sudden decrease in orders from their largest market. The industry warns that if negotiations do not progress, layoffs may be inevitable.
Several Indian ready-to-wear garment factories that were looking forward to a bilateral trade agreement and were preparing to expand to accommodate orders from US retailers like Walmart and Costco have urgently halted their expansion plans and are awaiting the outcome of the negotiations, according to Reuters.
Major Indian garment exporters such as Welspun Living, Gokaldas Exports, Indo Count, and Trident rely on the US for 40% to 70% of their revenue. Analysts suggest that if the 25% tariff is implemented, orders may shift to Vietnam, which currently faces a lower tariff of 20% from the US.
The US is the largest export market for Indian garments and jewelry, with total exports reaching nearly $22 billion in 2024. India holds a 5.8% market share in the US apparel market, ranking behind China, Vietnam, and Bangladesh.
“We had initially anticipated a post-negotiation tax rate of only 10% to 15% and had already begun expansion preparations,” said Gautam Nair, director of Matrix Design and Industries Pvt Ltd, a subsidiary of Gokaldas Exports, India’s largest garment exporter.
Gokaldas’ US clients include GAP, Walmart, and JCPenney. Nair expressed his astonishment at Trump’s sudden announcement of a 25% tariff, stating that if implemented, it would have a severe impact on exports. He emphasized that the Indian garment industry already faces higher production costs compared to major competitors like Bangladesh and Vietnam.
Trump has already announced a 25% tariff on Indian goods and additional punitive tariffs on Russia’s energy purchases.
In Tirupur, a textile hub in southern India, exporters are hoping for a swift agreement between both sides to eliminate uncertainty.
“If US orders decrease, factories will compete for orders among themselves,” said Naveen Michael John, Managing Director of Cotton Blossom India, a supplier to Walmart and Bass Pro Shops.
India’s gem and jewelry industry also heavily relies on the US market, with the US accounting for one-third of its annual export volume of $28.5 billion.
“Such a comprehensive tariff hike will increase costs, delay deliveries, distort prices, and put heavy pressure on the entire supply chain – from grassroots workers to large manufacturers,” said Kirit Bhansali, Chairman of the Gem and Jewelry Export Promotion Council (GJEPC).
In the 2024/25 fiscal year, India’s diamond cutting and polishing exports hit a nearly 20-year low, mainly due to a sharp decline in demand from China. Since 2021, China’s imports from India have nearly halved, and US consumption has also been weighed down by economic slowdown and tariff pressures.
With the upcoming holiday season in the US, India’s industry is urging the government to stabilize the trade situation by September to allow for ample production time.
“If there is no trade agreement, exports will not be able to recover,” said a jewelry exporter from Surat, a major hub for diamond cutting and polishing in India.
“We will be forced to reduce production and lay off workers,” he added.