3 major Indian garment factories are closing due to US tariffs

The Federation of Indian Export Organisations (FIEO) said Tuesday that textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness due to US President Donald Trump’s decision to impose an additional 25 per cent tariff on Indian exports, taking the cumulative tariffs to 50 per cent — the highest globally.

“Textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness. This sector is losing ground to lower-cost rivals from Vietnam and Bangladesh. As for seafood, especially shrimps, since the US market absorbs nearly 40 per cent of Indian seafood exports, the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress,” FIEO President S C Ralhan said in a statement.

“However, leveraging the negotiating window for urgent diplomatic engagement with the US still remains the key. Yet another approach could be the promotion of Brand India and innovation through enhanced global branding, investment in quality certifications, and embedding innovation in export strategy to make Indian goods more attractive globally,” FIEO said.

Ralhan said that 50 per cent US tariffs will severely disrupt the flow of Indian goods to its largest export market. He added that the development is a setback and could severely impact India’s exports to the US. “With approximately 55 per cent of India’s US-bound shipments ($47–48 billion) now exposed to pricing disadvantages of 30–35 per cent, Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines, and other Southeast and South Asian countries,” Ralhan said.

Meanwhile, the Confederation of Indian Textile Industry (CITI) said that textile manufacturers are looking for immediate upfront support from the government to address the enormous challenge posed to India’s textile and apparel exporters through the 50 per cent US tariff on Indian goods, which is to come into effect from August 27.

Ralhan said that 50 per cent US tariffs will severely disrupt the flow of Indian goods to its largest export market. He added that the development is a setback and could severely impact India’s exports to the US. “With approximately 55 per cent of India’s US-bound shipments ($47–48 billion) now exposed to pricing disadvantages of 30–35 per cent, Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines, and other Southeast and South Asian countries,” Ralhan said.

Meanwhile, the Confederation of Indian Textile Industry (CITI) said that textile manufacturers are looking for immediate upfront support from the government to address the enormous challenge posed to India’s textile and apparel exporters through the 50 per cent US tariff on Indian goods, which is to come into effect from August 27.

On other labour-intensive export sectors such as leather, ceramics, chemicals, handicrafts, and carpets, FIEO said that the industry faces a sharp erosion of competitiveness, particularly against European, Southeast Asian, and Mexican producers. “Delays, order cancellations, and negated cost advantages loom large over these sectors,” FIEO said.

“There is a need for immediate government support, which includes a push for interest subvention schemes and export credit support to sustain working capital and liquidity. To further support this, low-cost and easily available credit with emphasis on MSMEs — backed by banks and financial institutions under special government and Reserve Bank of India directives — is essential,” Ralhan said.

CITI has also asked the government for a moratorium on payment of principal and interest for loans for up to one year.