CMAI Urges Self-Reliance as US Tariffs Push Indian Garment Industry to the Brink

Soaring US Tariffs Spark Crisis in India’s Garment Industry, Threaten Jobs and Exports

Bangalore – India’s critical textiles and apparel sector, a cornerstone of the economy and a massive employer, is reeling from the impact of steep new tariffs imposed by the United States, with production halting in major hubs and exporters warning of severe job losses and a threat to the nation’s $100 billion export ambition.

The crisis was triggered after the US government levied an additional 25 per cent duty on Indian garments, pushing the cumulative tariff on some categories to a staggering 50 per cent—among the highest rates faced by any apparel-exporting nation. The move has instantly eroded the price competitiveness of Indian products in their largest market.

Production Grinds to a Halt

The immediate shockwaves have been felt in key industrial clusters. Factories in Tirupur, Noida, and Surat have reportedly slowed or temporarily suspended operations as order books thin out. Exporters cite a pricing disadvantage of 30-35% compared to rivals from Vietnam, Bangladesh, and Cambodia, leading to widespread cancellations and a refusal by large US brands to place new orders.

“The US trade policies have dealt a severe blow to Indian textile exporters,” said Ajoy Bhattacharya, Regional Director of the Clothing Manufacturers Association of India (CMAI). “With cumulative duties making operations unviable, we are already seeing a cascading effect where bigger players are forced to focus on the domestic market or source from competing countries.”

This shift, he warned, directly threatens retrenchments and layoffs across India’s apparel manufacturing hubs, which employ millions of workers, a majority of whom are women and migrant labourers from rural areas.

Calls for Intervention and a Path to Self-Reliance

Industry bodies are urgently calling for government support to manage the liquidity crunch. The Confederation of Indian Textile Industry (CITI) has asked for immediate fiscal measures, including interest subvention schemes, a moratorium on loan repayments, and faster clearance of export rebates to keep small and medium enterprises (MSMEs) afloat.

Beyond short-term aid, leaders like Bhattacharya see this crisis as a catalyst for a fundamental overhaul. He emphasized that India’s long-term path forward lies in indigenization and technological advancement.

“We must mandate the development of domestic textile machinery manufacturing within the next two to three years,” Bhattacharya stated. Currently, over 85% of such machinery is imported, creating a critical dependency. “By focusing on technology transfer, scaling up quality standards to meet European benchmarks, and investing in workforce skill development, we can turn this crisis into an opportunity to build a more self-reliant and globally competitive industry.”

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Wider Social and Economic Repercussions

The stakes extend far beyond export figures. The industry is integral to India’s socio-economic fabric. A sustained downturn risks not only foreign exchange earnings but also the welfare of millions of workers. Industry groups warn that job losses or wage cuts could lead to increased school dropouts among workers’ children and deferred medical care, as many rely on employer-linked insurance or government schemes.

Politically, the tariffs have ignited debate. Opposition leaders in India have criticized the government’s response, while in the US, consumer groups have warned of rising clothing prices for American shoppers.

Government Response and the Road Ahead

The Indian government has acknowledged the challenge. In response, it is attempting a balancing act, engaging diplomatically with Washington while taking domestic measures. These include a temporary duty exemption on cotton imports to lower raw material costs and efforts to diversify exports by targeting 40 countries across Asia, Africa, and Latin America.

Trade analysts believe the coming months will be decisive. The trajectory of cotton prices, global apparel demand, and the success of diversification efforts will determine the severity of the impact. Long-term recovery, however, will hinge on structural reforms.

As Bhattacharya concluded, the sector must “reimagine itself” by prioritizing self-sufficiency, strengthening skill development, and embedding innovation into its export strategy. Without a swift, coordinated, and strategic response, India risks ceding its hard-won ground in the global apparel market. With it, the industry can rebuild resilience and reclaim its position.