Garment exports from Tamil Nadu have reportedly plunged by around 8 per cent, driven primarily by the imposition of steep tariffs by the United States on Indian goods, specifically targeting the textile and apparel sector.
The US imposed a massive 50 per cent tariff on Indian exports, which makes garments significantly more expensive for American buyers compared to competitors. This tariff was initially a smaller ‘reciprocal’ duty which was later increased as a ‘penalty’ duty.
The tariff places Indian exporters at a significant disadvantage, as competitors like Bangladesh, Vietnam, and Indonesia face much lower US tariffs. This 30-point gap makes Indian products less viable in the US market.
Tamil Nadu is a powerhouse for India's textile sector, contributing about 28 per cent of the country's total textile exports. Known as India's ‘knitwear capital,’ Tiruppur sends a large portion of its garments to the US.
Exporters in hubs like Tiruppur are reporting drastic reductions and cancellations of US orders, with some claiming up to 80 per cent of US business has stalled.
US buyers are demanding steep discounts from Indian suppliers to offset the tariff cost, forcing exporters to operate at a loss just to maintain relationships or get paid for existing stock.
Factories are cutting work hours, reducing production shifts, and laying off workers, particularly contract and migrant laborers. The state government has warned that up to 30 lakh (3 million) jobs across the textile belt are at immediate risk.
There are reports of significant inventory buildup and rising working capital requirements as orders are on hold.
The Tamil Nadu government estimated that the state could lose up to $3.93 billion in export value across all affected sectors, with the textile sector alone potentially losing $1.62 billion.
The crisis is especially impacting women, who make up a large portion of the workforce in garment hubs like Tiruppur.
In essence, the 8 per cent plunge reflects the initial, severe impact of the 50 per cent US tariff, which has made Tamil Nadu's garments uncompetitive and led to a cascade of canceled orders and production halts.
