US companies halt garment orders from India amid tariff hike

Following the United States’ announcement of additional retaliatory tariffs, India’s garment sector is facing a severe crisis. Many American buyers are reportedly considering shifting production out of India, with some already suspending orders.

Turkey’s TRT World, citing Reuters, reported on Friday that Pearl Global — a supplier to US brands Gap and Kohl’s — has been contacted by numerous clients concerned about rising costs and the possibility of moving production to other countries.

Pearl Global has factories in Bangladesh, Indonesia, Vietnam, and Guatemala. Managing Director Pallav Banerjee confirmed that buyers are urging the company to relocate production from India.

The US has imposed a total 50% reciprocal tariff on Indian products, with 25% effective from last Thursday and the remaining 25% set to take effect from August 28. Meanwhile, competitors such as Vietnam and Bangladesh face 20% tariffs, and China faces 30%.

Reuters also noted that some US buyers have already put orders on hold, while others are pushing for production to move to lower-tariff countries.

Richco Exports, which exported $113 million worth of garments to the US this year, including to clients like J. Crew Group, said the industry is experiencing a downturn. General Manager Dinesh Raheja revealed plans to set up a production center in Kathmandu, Nepal.

Amit Agarwal, Finance Head at Raymond, one of India’s leading garment manufacturers, said Ethiopia’s US tariff rate is only 10%, prompting plans to increase production there within three months.

Tiruppur in Tamil Nadu, known as India’s knitwear hub, accounts for nearly one-third of India’s garment exports. Exporters there, initially optimistic, are now increasingly concerned.

Naveen Michael John, Executive Director of Cotton Blossom India, said buyers have asked some Tiruppur factories to suspend orders. Others are rushing shipments before the full tariff kicks in.

Tiruppur-made garments sell in the US market for as low as $1, with T-shirts priced between $3.50 and $5. N. Thirukumaran, General Secretary of the Tiruppur Exporters Association, said these goods will face the full 50% tariff upon entry to the US.