As Indian apparel makers turn on their machines for the next U.S. fall-winter cycle, the industry is bracing for another possible shock: The threat of a 500 percent tariff clouds export prospects and factory utilization.According to exporters, buyer sentiment has changed significantly in recent weeks. “Buyers who were earlier thinking of shifting some orders to India don’t want to come anymore. They have started writing to us asking what will happen if this 500 per cent duty is imposed, who will take the guarantee,” Vijay Agarwal, chairman of the Cotton Textiles Export Promotion Council, told ET. The concerns are coming into the spotlight even before the industry has recovered from 50% tariffs imposed by the US in August last year.These tariffs forced exporters into a survival mode characterized by deep discounting, redirecting idle capacity to domestic brands, and rerouting orders from abroad through neighboring countries. Uncertainty deepened on Wednesday after U.S. Senator Lindsey Graham said President Donald Trump had agreed to a bill that would impose 500 percent tariffs on countries that continue to trade with Russia.The US remains India’s largest market for apparel and textiles, accounting for 28-30% of exports. In 2024-25, India supplied apparel and textiles worth $37 billion. Since the introduction of the 50 percent tariffs, the sector has struggled to stabilize. Figures from the Confederation of Indian Textile Industries show that garment exports increased by just 2.28% between April and November 2025, while textile exports fell by 2.27%.Despite the risks, manufacturers say stopping production is not an option. “As far as US tariffs are concerned, the situation remains extremely uncertain. But we still have to produce the goods. We have to take the risk,” Agarwal said.Some companies have already absorbed losses to keep export lines running. “We have offered deep discounts to keep exports going in the hope that the issue will be resolved soon,” said Rajat Jaipuria, managing director of Kolkata-based Rajalaxmi Cotton Mills, which employs around 8,000 workers. The company has now begun fall production, but Jaipuria warned of serious consequences if the proposed tariffs were enforced. “We have now started production for orders for the fall season. However, a 500% tariff would effectively amount to an embargo,” he said. “We are unsure how factories will be able to continue operating if exports to the U.S. cease.”For the upcoming season, US buyers have already started looking for alternatives outside India. Executives say signals of stress are emerging in Tiruppur, the hub that accounts for nearly 90% of India’s knitwear exports – underscoring increasing pressures across the supply chain.
