The United States is threatening to impose a 500% tax on the Indian apparel sector. Exports are predicted to be negatively impacted by this. Buyers are staying away from India. The 50% tariff is already making it difficult for the business to recover. Millions of workers’ livelihoods may potentially be at risk. It is anticipated that the government will step in.
The Indian Apparel Sector Faces Major Challenges
The Indian apparel sector is preparing for a significant setback. Exports are under danger due to the US threat of a 500% tariff. This will probably affect manufacturing operations as well. Exporters claim that in recent weeks, customer mood has drastically changed. It would benefit both parties if India were subject to such high tariffs.
Bangladesh Gains Competitive Advantage
Bangladesh will immediately benefit in terms of competitiveness and price. “Buyers who were earlier contemplating moving orders to India are now unwilling to come,” said Vijay Agarwal, head of the Cotton Textiles Export Promotion Council, to ET. They have been writing to us, inquiring as to “who will guarantee it and what would happen if this 500% tax is implemented.” The sector has not yet completely recovered from the 50% tariff that the US imposed in August of last year, which raises this issue.
Exporters were already in a difficult situation due to the 50% tax. They had to redirect overseas orders to nearby nations, exploit idle capacity for indigenous brands, and give steep discounts. When US Senator Lindsey Graham said on Wednesday that President Donald Trump has authorized a plan to slap 500% tariffs on those who continue to deal with Russia, this uncertainty became even more.
🚚 Indian Apparel Industry Update
- Impact: 500% US Tariff Threat
- Exports at Risk: US market crucial for India
- Workers: Millions affected
- Alternatives: Bangladesh may gain market share
- Government: Intervention expected
Bangladesh’s Opportunity
Bangladesh would benefit greatly from a 500% tariff. American consumers would suddenly have to pay more for Indian clothing. Bangladesh would immediately gain from this in terms of price and competitiveness. The profit margins in the clothing industry are quite low. As a result, Bangladesh would become an alternative to India for American merchants.
There would be no tariff burden, and labor expenses are already minimal. International companies will have to move their supply lines from India to Bangladesh as a result of this circumstance. Bangladeshi exporters will have a unique chance to take up India’s worldwide market share as a result.
India’s Exports and Market Dependency
India’s biggest market for clothing and textiles is the United States. It makes up between 28 and 30 percent of India’s overall exports. India exported $37 billion worth of clothing and textiles in 2024–2025. Since the installation of a 50% tariff, the industry has had difficulty stabilizing.
The Confederation of Indian Textile Industry reports that between April and November 2025, textile exports fell by 2.27% and apparel exports increased by just 2.28%. Manufacturers claim that stopping manufacturing is not an option despite these concerns. “The scenario about US tariffs is still quite murky,” said Agarwal. However, we must manufacture stuff. We must accept this danger.
Exporters’ Challenges
Some businesses have already suffered losses in order to keep exporting. The managing director of the 8,000-person Rajlaxmi Cotton Mills in Kolkata, Rajat Jaipuria, said, “We provided huge discounts to maintain exporting, expecting the matter would be addressed soon.” For the autumn season, his firm has now started up again. However, Jaipuria cautioned that if the new tariffs are put into effect, there would be dire repercussions. “For orders for the autumn season, we have recently started up manufacturing again.
But a 500% tariff would essentially amount to a prohibition,” he said. “If shipments to the US are prohibited, we do not comprehend how factories would continue to function.” For the next season, American consumers are already searching for alternatives to India. Tiruppur, which produces around 90% of India’s knitwear exports, is showing symptoms of pressure, according to officials. This demonstrates the strain on the supply chain.
⚠️ Industry Response & Export Concerns
- Production: Continues despite tariff threat
- Discounts: Offered to maintain clients
- Supply Chain: Tiruppur under stress
- Market Shift: US buyers exploring alternatives
- Government Role: Expected to intervene strategically
Frequently Asked Questions
1. Why is a 500% tax on Indian clothing being considered by the US?
The proposed tax is a component of US policies aimed at nations that continue to do business with Russia. Its goal is to punish countries that engage in certain transactions, such as the export of textiles from India.
2. What impact would a 500% tariff have on Indian exporters?
Indian clothing will become unaffordable for US consumers with a 500% tax. This may imperil the lives of millions of workers in the sector, dramatically cut exports, and stop operations in certain facilities.
3. Why may this circumstance be advantageous to Bangladesh?
American consumers would probably move their purchases to Bangladesh as Indian clothing became more costly. Bangladesh could be able to overtake India in the US market because to lower labor costs and the absence of tariffs.
4. What is the size of the Indian clothing market in the United States?
About 28–30% of India’s total exports of clothing and textiles go to the US. India exported $37 billion worth of commodities to the United States in 2024–2025. The industry would suffer a serious setback if it lost this market.
5. How are Indian exporters reacting?
In spite of the uncertainty, manufacturers are seeking other markets, keeping up production, and providing discounts to keep customers. They emphasize, nonetheless, that the planned 500% tariff would have disastrous effects for company continuity.
Conclusion
For the Indian apparel business, the projected 500% US tax poses an existential threat. Bangladesh would benefit, while India may suffer a significant loss in jobs, manufacturing operations, and exports. To safeguard the industry and stop international orders from shifting to other nations, the government must act quickly and strategically.
Disclaimer
The only objective of this article is to provide information. Publicly accessible studies and professional judgments serve as the foundation for the information and claims about US tariffs, Indian exports, and industry reactions. It is not financial, legal, or investment advice.
