In a high-stakes appeal for the survival of India’s garment sector, the Apparel Export Promotion Council (AEPC) has formally approached the Vice President of India, C.P. Radhakrishnan. The industry body is seeking an immediate resolution to an escalating India-U.S. tariff dispute that threatens to dismantle the nation’s textile export framework.
Apparel sector pushed to the brink
The Council’s plea highlights a critical situation triggered by recent U.S. trade actions, specifically the imposition of a 25% tariff alongside an additional 25% oil-related penalty. These measures have caused severe disruption to India’s textile exports, particularly because the U.S. serves as the largest single market for Indian apparel. For many major exporters, the American market accounts for approximately 70% of their total business, making the impact of these tariffs catastrophic.
The industry is currently struggling with structural constraints that make it impossible to absorb these costs. AEPC Chairman Dr. A. Sakthivel noted that the sector operates on incredibly thin margins and faces a long-term production cycle consisting of a six-month development period and four months of work-in-progress inventory. Furthermore, with wage costs making up 30% of the industry’s expenses, the majority of which are fixed, exporters lack the financial flexibility to withstand prolonged tariff shocks.
The cost of national interest
In an effort to protect exports and maintain production continuity, Indian exporters have already taken the drastic step of absorbing a 25% price reduction equivalent to the U.S. oil penalty. While this was done in anticipation of a swift treaty resolution, it has effectively wiped out profits and depleted the industry's financial reserves. The Council warned that while this strategy was intended as a short-term bridge to retain U.S. customers, it is no longer sustainable.
The risk is now escalating as U.S. buyers begin to withhold or cancel new orders, unwilling to risk mid-cycle tariff increases. The AEPC emphasized that further tariff absorption is commercially impossible and passing these costs on to buyers is not a viable option. Diversifying into alternate markets is also ruled out as a short-term solution because textile sourcing is deeply embedded in long-term supply chains, requiring two to three years for new buyer onboarding and compliance audits.
A call for immediate action
The consequences of continued inaction are described as dire, ranging from immediate factory shutdowns and large-scale job losses to the irreversible loss of U.S. market share to competitor nations. The AEPC argues that competitor nations with preferential trade access are already positioned to replace India if this crisis persists.
Consequently, the Council has requested that the Vice President refer the matter to the Government of India for the fast-tracking of India-U.S. tariff negotiations. Specifically, the industry is seeking the immediate conclusion of a tariff treaty or, at the very least, an interim relief mechanism to restore buyer confidence and protect ongoing commitments. The AEPC concluded its appeal by stating that there is no further shock-absorption capacity left in the sector, and a delay of even three to six months could cause permanent damage to this strategic industry.
