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Following the recent 50 per cent tariffs imposed by the US on Indian goods, several Indian companies are strategically shifting their operations to Africa to maintain access to the American market. This move is a direct response to the punitive tariffs, which were a consequence of India's continued purchases of Russian oil.
Companies like apparel manufacturer Gokaldas Exports and premium garments maker Raymond Lifestyle are among those looking to expand production in African countries, where US tariffs can be as low as 10 per cent. The tariffs have hit labor-intensive sectors such as jewelry and apparel the hardest, with a recent Bloomberg Economics note suggesting that exports of some goods could drop by as much as 90 per cent.
The tariffs are expected to more than halve India's overall exports to its largest market, the US/ In 2023, India exported over $20 billion in textile products, jewelry, and diamonds to the U.S.
Sivaramakrishnan Ganapathi, Managing Director, Gokaldas Exports, confirms, his company plans to continue expanding its presence in Africa to offset the high tariffs. Gokaldas already operates four factories in Kenya and one in Ethiopia, both of which face a 10 per cent US tariff. Similarly, Amit Agarwal, CFO, Raymond Lifestyle, notes, the company is in talks with its American clients to increase shipments from its Ethiopian plant.
African nations have emerged as a viable alternative for Indian companies due to favorable business environments. Countries like Ethiopia, Nigeria, Botswana, and Morocco are offering various incentives, including tax holidays, customs duty exemptions, and value-added tax (VAT) exemptions, to attract foreign investment.
In a bid to address a long-standing issue threatening the man-made fiber (MMF) textile industry, the Northern India Textile Mills Association (NITMA) has urged the Union Finance Minister and the GST Council to ensure a uniform GST rate of 5 per cent is levied on both Polyester Staple Fiber (PSF) and Polyester Staple Yarn (PSY), thus aligning them with the tax on fabrics and garments.
This change would eliminate the inverted duty anomaly, free up capital, and make the spinning industry financially sustainable, states Siddharth Khanna, President, NITMA.
A failure to act on this could lead to widespread factory shutdowns and job losses across the country, Khanna adds. He highlights, while the cotton value chain enjoys a uniform 5 per cent GST on all its products, the MMF sector faces disparate tax rates that create a significant imbalance. The current GST framework taxes PSF at 18 per cent, polyester spun yarn PSY)at 12 per cent, and MMF fabrics and garments at just 5 per cent. This misalignment means manufacturers get taxed more for their raw materials than for their finished products, leading to a financial logjam.
This structure is an existential threat to the industry, emphasizes Khanna. The high tax on raw materials like PSF forces companies to block a significant portion of their annual turnover in GST refunds, leading to high interest costs on locked capital and complex refund procedures. The tax on new capital investments is also hiked by 18 per cent, making it expensive to modernize. Moreover, imported yarns, which don't face this domestic tax structure, gain an unfair advantage, directly undermining the ‘Make in India’ initiative.
Amazon finds itself at the center of a new wave of legal and regulatory scrutiny in Europe, as two major actions challenge its long-standing price-parity policies. In the UK, a consumer group is spearheading a massive class action lawsuit on behalf of millions of customers, while in Germany, antitrust regulators are probing the company's algorithm-driven pricing mechanisms. These cases highlight a shift from past regulatory battles over explicit clauses to a new front focused on the subtle, yet powerful, influence of algorithmic control.
UK class action seeks compensation
The Association of Consumer Support Organisations (ASCO) has initiated a collective opt-out class action against Amazon in the UK, alleging that the e-commerce giant's policies forced consumers to pay inflated prices. The lawsuit, filed with the Competition Appeal Tribunal, represents over 45 million customers who purchased from third-party sellers on the platform between August 2019 and August 2025.
ASCO argues that while Amazon formally removed its explicit price-parity clauses, it has continued to enforce price alignment through other means, such as its ‘Fair Pricing Policy’ and its dominant Buy Box algorithm. This, according to the group, restricts sellers' ability to offer lower prices on competing platforms and ultimately harms consumers.
In a statement, Amazon responded that the claim is "without merit," citing an independent analysis by Profitero that found Amazon to be the lowest-priced online retailer in the UK for the fifth consecutive year.
German regulators probe algorithmic controls
Simultaneously, Germany’s Federal Cartel Office (Bundeskartellamt) has raised its own concerns about Amazon’s pricing mechanisms. The regulator is investigating whether the company's system, which highlights competitively priced listings and suppresses those it deems "overpriced," violates competition laws.
The investigation focuses on how Amazon's algorithms can first, suppress visibility. Listings flagged as ‘uncompetitive’ may be demoted in search results, excluded from advertising, and lose the coveted Buy Box the white box on a product page where a customer can add an item to their cart. Also under the radar is pricing pressure. Sellers who don't comply with Amazon’s dynamically calculated price caps risk being removed from the marketplace altogether, effectively forcing them to align their prices. This marks a new phase of regulatory enforcement, moving beyond the simple presence of a price-parity clause to scrutinizing the opaque, complex code that governs the marketplace.
The historical shift from clauses to code
The current legal challenges are the culmination of a decade-long battle over Amazon's pricing practices.
Table: Amazon’s policies under scrutiny
|
Jurisdiction |
Explicit parity clause |
Algorithmic enforcement |
|
Europe (EU) |
Removed in 2013 following antitrust probes. |
Under review by German Federal Cartel Office and EU's Digital Markets Act. |
|
US |
Removed in 2019 amid mounting antitrust scrutiny. |
Subject of lawsuits from D.C. Attorney General and class action plaintiffs. |
After the official removal of its clauses, Amazon has faced accusations of replacing them with functionally equivalent policies. Attorneys general in Washington, D.C. have argued in court filings that policies like the Fair Pricing Policy and the Buy Box algorithm are designed to maintain price alignment and prevent sellers from undercutting Amazon on other platforms.
Experts say that ending price-parity clauses can lead to tangible benefits for consumers. A 2021 study by Yu Song of the University of Michigan analyzed the impact of Amazon's 2019 decision to drop its price-parity clauses in the US.
Table: Study findings
|
Outcome |
Impact |
|
Prices on Amazon |
Decreased, especially for products sold directly by Amazon. |
|
Prices on eBay |
Also decreased, showing increased competition between platforms. |
|
Impact on Sellers |
Greater price flexibility, leading to lower prices on all platforms. |
The findings of the study align with economic theory, showcasing that when a dominant platform loses its ability to enforce pricing across the web it fosters greater platform competition and results in lower prices for consumers.
Legal and regulatory precedents
The outcome of the UK and German cases will set important precedents. The UK class action, if it proceeds, could result in significant financial compensation for millions of consumers. In the US, similar litigation from the D.C. Attorney General's office is ongoing and could further define the legal boundaries for platforms. The European Union's Digital Markets Act (DMA), which came into force in March 2024, is also a key factor. The DMA designates Amazon as a ‘gatekeeper’ and prohibits unfair practices, including those that might enforce a de facto price-parity. This gives regulators powerful new tools to examine and intervene in the very algorithms that govern Amazon’s marketplace.
As regulators and courts increasingly focus on the behavior of a platform's algorithms, the debate over price-parity is no longer about a simple contract clause but about the fundamental fairness and transparency of digital marketplaces.
The value of the global market for women's apparel is projected to grow at a 4 per cent CAGR to reach $1.28 trillion by 2033. This growth is being driven by a number of factors, including a growing global female population, rising awareness of women's rights, and an increased focus on personal style and well-being. The industry is also being reshaped by the rapid rise of e-commerce and a growing demand for sustainability.
Technological advancements are playing a crucial role in this transformation. The development of eco-friendly and recycled fabrics is a key trend, with brands like the Indian athleisure company aastey introducing sustainable blends. Additionally, tech innovations are enhancing the online shopping experience. Virtual try-on technologies and AI-driven personalization are helping consumers visualize how clothes will fit, which boosts satisfaction and reduces returns. The use of data is also transforming product development, as seen with ThirdLove, a company that used 600 billion data points to create better-fitting bras.
Demand for women's apparel is also being influenced by key social and economic trends. The global female population is projected to reach parity with males by 2050, expanding the consumer base. The rise of urbanization and increasing disposable incomes in emerging economies are also fueling growth. A growing number of working women is boosting sales of formalwear and activewear. This has also created new opportunities for brands that are focusing on size inclusivity and sustainable fashion to cater to a diverse consumer base.
From a market segmentation perspective, tops, shirts, t-shirts remain the top investment segment due to their versatility and broad appeal. The online sales channel is projected to grow at a 5 per cent CAGR, driven by the shopping habits of Millennials and Gen Z. The 18-35 age demographic is a key target market, as younger consumers influence trends through social media. Geographically, key countries like India, the United States, and China are leading the market, each with unique drivers. For example, the US market is being shaped by trends in inclusivity and casualization, while China is benefiting from its growing middle class and increasing demand for premium and sustainable clothing.
Indonesia is actively engaging in the global fashion scene by sending designers and industry representatives to two major international events: the BRICS+ Fashion Summit in Moscow and Front Row Paris.
Held annually in Moscow, Russia, the BRICS+ Fashion Summit brings together industry leaders and creatives from over 60 countries to discuss the future of the global fashion industry. The key themes revolve around decentralization and democratization, with a focus on showcasing emerging fashion markets and fostering cross-cultural collaboration.
The summit provides Indonesian designers with a platform to discuss industry challenges, promote their work, and forge new partnerships. Ali Charisma, President, Indonesian Fashion Chamber (IFC), has previously been a delegate at this event.
Scheduled to be held on September 6, 2025 in Les Salons Hoche, Paris, Front Row Paris is a flagship initiative by IFC to promote Indonesian traditional fabrics and textiles, known as wastra, to the European market. It aims to position Indonesia as a significant player in the global fashion industry.
Themed ‘Wastra Beyond Borders,’ the 2025 event features seven Indonesian designers and fashion brands. The event also coincides with the 75th anniversary of diplomatic relations between Indonesia and France, serving as a platform to strengthen cultural diplomacy through the creative economy. The Indonesian Embassy in Paris supports the event, underscoring its importance in showcasing the country's unique creative and cultural heritage.
The Clothing Manufacturers Association of India (CMAI) is advocating for a uniform 5 per cent Goods and Services Tax (GST) rate across the entire Indian textile value chain. This proposal aims to simplify the current multi-tiered tax structure, which has created complications and a problem known as the inverted duty structure.
The current GST framework for textiles is complex and varies based on the type of product and its price. Garments priced below Rs 1,000 are taxed at 5 per cent while garments priced above Rs 1,000 are taxed at 12 per cent.
Raw materials like Purified Terephthalic Acid (PTA) and Monoethylene Glycol (MEG) are taxed at 18 per cent, MMF filament and spun yarn are taxed at 12 per cent. Fabrics and garments are taxed at 5 per cent or 12 per cent, depending on the price.
This differential taxation creates an inverted duty structure, where the tax on raw materials (eg: MMF) is higher than the tax on the finished product (garments). This makes it difficult for manufacturers to claim a full Input Tax Credit (ITC), leading to a build-up of tax liability and an increase in working capital costs.
Supporting a uniform 5 per cent GST, CMAI and other industry bodies like the Confederation of Indian Textile Industry (CITI), argue, a lower tax rate would make textiles and garments more affordable for consumers. They believe, a single tax rate would eliminate the confusion and compliance complexities caused by multiple slabs and price thresholds. This would also reduce the risk of under-invoicing and the informal ‘grey; market. A uniform 5 per cent GST would also support higher-priced traditional wear, handloom, and embroidered garments that are currently penalized by the 12 per cent GST rate. Besides, a lower, uniform GST would stimulate demand and help the industry grow. Additionally, it would help attract investments and create more jobs.
The GST Council is currently considering a major restructuring of the tax slabs, and CMAI is hopeful that the textile industry will be placed in the lowest 5 per cent slab to address these long-standing issues.
Formerly known as the Boohoo Group, Debenhams Group registered 3 per cent growth in adjusted EBITDA to £41.6 million for the fiscal year that ended on February 28, 2025. This was a result of the major transformation undergone by the company under new leadership.
Having his position as the CEO in November 2024, Dan Finley implemented aggressive cost-cutting measures, including £50 million in annualized headcount savings. This resulted in the achieving the strong performance for its Debenhams brand, which saw GMV (Gross Merchandise Value) grow by 34 per cent to £654 million and delivered £25 million in adjusted EBITDA.
The group also significantly reduced expenses by cutting inventory holdings by over 50 per cent and decreasing capital expenditure by more than 50 per cent. As a result, net debt reduced to £78.2 million at the end of the year, down from £143.1 million at the half-year mark and £95 million in fiscal year 2024.
In August 2025, the company secured a new three-year finance facility of up to £175 million, replacing its previous facility more than a year before it was due to expire.
While group revenue declined by 12 per cent to £790.3 million, this reflects the growing importance of the marketplace model, where only commission income is recognized instead of the full transaction value. The gross margin also saw a slight decrease of 50 basis points to 52.6 per cent.
The company is exploring the potential sale of PrettyLittleThing (PLT) and is evaluating options for its US and Burnley distribution sites to align with its new ‘stock-lite’ strategy.
The company anticipates that its adjusted EBITDA for continuing operations in H1, FY26 will surpass the same period in FY25. The transformation strategy is centered on creating the right operating model, expanding the Debenhams brand, and shifting toward fashion-led marketplaces.
In Q3, FY25, American clothing and accessories retailer Gap Inc projects a 1.5 per cent -2.5 per cent rise in net sales while gross margins are expected to increase by 150-170 bps including a 200 bps tariff impact.
In Q2, FY25, Gap reported net sales of $3.7 billion, which was flat compared to the previous fiscal year. However, the brand’s comparable sales increased by 1 per cent, marking the sixth consecutive quarter of positive comps. The company’s diluted earnings per share (EPS) increased by 6 per cent Y-o-Y, which was supported by disciplined cost management despite margin pressures.
Online sales grew by 3 per cent and accounted for 34 per cent of total sales, while store sales declined by 1 per cent. The company closed the quarter with about 3,500 stores, with 2,486 being company-operated.
The company’s gross margin shrank by 140 basis points to 41.2 per cent, largely due to a credit card revenue-sharing benefit from the previous year. Operating income was $292 million, reflecting a margin of 7.8 per cent. Net income totaled $216 million with an effective tax rate of 27 per cent.
At the brand level, Old Navy recorded a 1 per cent rise in sales to $2.2 billion with comparable sales increasing by 2 per cent. Sales of the Gap brand also increased by 1 per cent to $772 million with comparable sales rising 4 per cent, marking the seventh consecutive quarter of positive comps.
Banana Republic recorded a 1 per cent decline in sales to $475 million, but its comparable sales increased 4 per cent, reflecting progress in its repositioning strategy. However, Athleta continued to struggle, with sales declining by 11 per cent to $300 million.
Parent company of iconic brands like Calvin Klein and Tommy Hilfiger, PVH Corp reported a 4 per cent rise in revenue in Q2, FY25. The company’s growth was driven by robust performance in the Americas, which registered a 11 per cent rise in revenue. This growth was supported by strong results in both its direct-to-consumer and wholesale channels.
The company's non-GAAP earnings per share (EPS) reached $2.52, significantly surpassing the expected range of $1.85 to $2.00. While PVH faced challenges such as rising tariffs and a promotional retail environment that squeezed gross margins, the company maintained profitability through disciplined cost management and strategic investments.
Looking ahead, PVH Corp has reaffirmed its full-year non-GAAP earnings outlook and even slightly raised its revenue guidance, a sign of confidence in its strategic initiatives and the strength of its core brands.
The global trade stage has seen a reset this August with escalating US tariffs, creating a high-stakes, three-way competition for South Asia's textile and apparel powerhouses. The US, citing a ‘reciprocal’ trade policy, has imposed varying and punitive tariffs that have upended long-standing export dynamics. This new reality pits Pakistan against Bangladesh in a battle for market share, while India, facing the steepest tariffs, scrambles to maintain its foothold in its most critical export market.
The new tariff regime and its immediate impact
As of August 2025, the US has imposed a multi-tiered tariff structure on major textile and apparel exporters. The core of this new policy includes a 19 per cent tariff on Pakistani goods, a 20 per cent tariff on Bangladeshi goods, and a devastating 25 per cent (with the potential to rise to 50 per cent) on Indian products. This is a major departure from previous trade arrangements and has created a direct, measurable impact on the export viability of each nation.
The tariffs immediately eroded Pakistan's comfortable lead over Bangladesh. The initial 5 per cent tariff advantage Pakistan held has now been whittled down to a razor-thin 1 per cent. While this 1 per cent margin still provides a competitive edge, it is a precarious one, especially against Bangladesh's massive, cost-efficient manufacturing base.
For India, the situation is far more dire. With a tariff rate of 25 per cent (and a potential increase to 50 per cent), Indian textiles and apparel are now at a severe disadvantage. Indian exports to the US fell for the fourth consecutive month in July 2025. This has placed India's annual $10 billion textile exports to the US at significant risk, creating a void that its South Asian rivals are eager to fill.
Table: US tariff rates and export competitiveness (August 2025)
|
Country |
US tariff rate (apparel & textiles) |
Competitive dynamics |
|
Pakistan |
19% |
Cautious advantage over Bangladesh; prime position to capture Indian market share. |
|
Bangladesh |
20% |
Narrow disadvantage to Pakistan, but with significant scale and cost advantages. |
|
India |
25% (potentially 50%) |
Severely disadvantaged; facing a significant erosion of market share. |
Bangladesh's cost and scale advantage vs. Pakistan's tariff edge
While Pakistan enjoys a slight tariff advantage, Bangladesh's textile industry is a formidable opponent. The Bangladeshi garment sector employs 4.1 million workers, nearly triple Pakistan's textile workforce. This massive scale allows for economies of scale in production and logistics. Furthermore, Bangladesh's manufacturing facilities benefit from at least 60 per cent lower power and gas tariffs compared to Pakistan, significantly reducing operational costs.
Bangladesh's established buyer relationships with major US fashion brands and its robust, high-volume manufacturing capabilities could easily overwhelm Pakistan's narrow price edge. Bangladeshi textile lobbies are also actively pressuring the government to negotiate even lower US tariff rates, a sign of their proactive and aggressive approach to market access.
Table: Pakistan vs. Bangladesh a comparison
|
Metric |
Pakistan |
Bangladesh |
|
Total Exports (All Sectors) |
$16 billion |
$47 billion (garments alone) |
|
Textile Workforce |
Approx. 1.4 million |
4.1 million |
|
Power & Gas Tariffs |
High |
At least 60% lower than Pakistan |
India's vulnerability and the hunt for new suppliers
India's punitive tariff rate has made it a less attractive sourcing destination for major US retailers. Major US buyers like Target and Walmart are reportedly re-evaluating their supplier relationships. This is a critical development, as these retailers are known for their ‘value-seeking consumer’ base, where price and efficiency are paramount. With India's tariffs slashing margins, the incentive to source from the country diminishes.
Pakistani manufacturers are already reporting an unprecedented increase in inquiries from US buyers, indicating that a shift in the supply chain is underway. This is a direct consequence of the six-point tariff advantage Pakistan holds over India. Indian suppliers, desperate to retain their US market share, are resorting to slashing prices and operating on razor-thin margins a strategy that is unsustainable in the long term.
The inter-regional supply chain dynamics
The tariff changes are also expected to reshape the textile supply chain within the South Asian region itself. The textile industry is a complex web of raw materials, fibers, yarn, and fabrics. Historically, intra-regional trade has been limited, with South Asia's intra-regional trade accounting for only about 5 per cent of its total merchandise trade. However, this may change.
With India's final products now subject to such high tariffs, Indian textile manufacturers might explore new strategies. This could include a shift towards exporting raw materials, fibers, or yarns to countries with more favorable tariff arrangements, such as Bangladesh and Pakistan. This is a ‘China Plus One’ strategy applied to the subcontinent.
Raw materials and yarns: Indian yarn and fabric producers, faced with a crippled finished-goods export market to the US, may find a new customer base in Bangladesh. The logic is that Bangladeshi garment factories, with their 20 per cent tariff rate and low operational costs, can import Indian raw materials and still produce a final product that is more competitive in the US market than an entirely Indian-made product. This would create a new, symbiotic relationship, where India supplies the inputs and Bangladesh provides the final, tariff-advantaged output.
Home textiles: The home textiles sector, which includes towels, bed linens, and upholstery, is also heavily impacted. India has a significant market share in this category, and the 25 per cent tariff will make Indian home textiles less competitive against those from Pakistan and even Vietnam. This will lead US buyers of home goods to actively seek out new suppliers. Pakistan, with its integrated textile industry from cotton to finished goods, is well-positioned to capitalize on this shift.
The Walmart and Target conundrum
The mention of US retailers like Target and Walmart reassessing their supplier relationships is a crucial element of this story. These companies operate on a model of providing ‘everyday low prices’, where any increase in sourcing costs due to tariffs is a direct hit to their profitability and their core value proposition to the consumer. A tariff hike of even a few percentage points can lead to a shift in a multi-billion dollar sourcing portfolio.
For these retailers, the new tariff structure provides a clear incentive to diversify away from India and increase their sourcing from Pakistan and Bangladesh.
Walmart had previously committed to sourcing $10 billion worth of goods from India by 2027. This ambitious goal now faces a headwind due to the new tariffs. While Walmart is known to work with a diverse network of suppliers, the 25 per cent tariff on Indian goods will undoubtedly force a re-evaluation of this commitment. It is highly likely that they will shift a portion of their textile and apparel orders to Pakistan and Bangladesh to mitigate the financial impact of the tariffs.
Target, a major player in home textiles, will be looking to its suppliers to absorb the cost of the tariffs or find alternative sourcing. Given the intense competition and thin margins in the home textiles sector, it is unlikely that Indian suppliers can bear the full weight of a 25 per cent tariff. This creates an immediate opportunity for Pakistani home textile manufacturers, who can offer a more competitive price point due to their lower tariff rate.
Thus the US's post-tariff trade scenario is not a static one. It is a, evolving situation where a slight tariff advantage, combined with a nation's existing manufacturing strengths, can lead to significant shifts in market share. While India faces an existential challenge to its US textile exports, Pakistan and Bangladesh are locked in a fierce, multi-faceted competition. The ripple effects will extend far beyond national borders, reshaping the very fabric of the South Asian textile supply chain.
