The 50% tariff imposed by the US on Indian textile exports is set to hit Tamil Nadu particularly hard. The state is home to Tiruppur, one of the country’s largest textile hubs, which accounts for nearly 60% of India’s knitwear exports.
Chief Minister M.K. Stalin has written to Prime Minister Narendra Modi, warning that the tariff could severely affect Tamil Nadu’s textile and apparel sector. He urged the Centre to provide special financial assistance to exporters. Tamil Nadu alone contributed $8 billion — 26.8% of India’s total textile exports worth $37 billion — in FY25.
K.M. Subramanian, president of the Tiruppur Exporters Association (TEA), said: “Nearly 60% of knitwear exports come from Tiruppur. Last year, our exports were worth ₹45,000 crore. With the new tariff, business worth ₹12,000 crore is immediately at risk. We urgently need the Union government to intervene with the US and provide financial support to exporters and manufacturers.”
Tiruppur employs over 8-9 lakh people in their 2,500 factories across the district. Over 60% of these are women.
Raja M Shanmughan, an exporter and former president of TEA, says, “In the past 10 days, shipment worth 4,000 crore has been stopped because of the US tariffs. For the past two months, Indian exporters and the US importers have been sharing the basic tariff 10%.”
On the possibility of retrenchment, Subramanian says that they are analysing the losses and nothing can be said for the time being. Shanmugham said that some of the units in Tiruppur are shut because the consignment has been put on hold, but no job losses as of now.
India has set a target of $100 billion in textile and apparel exports by 2030. But exporters and trade experts are skeptical. With India’s current exports at $37 billion, the additional 50% tariff makes the goal difficult to achieve in the next five years. Some estimates suggest the tariff could hit 28–40% of India’s overall textile business with the US.
According to the Confederation of Indian Textile Industry (CITI), India exported over $10 billion worth of textiles and apparel to the US in FY25. But growth has slowed. In June 2025, exports to the US grew just 3.3% year-on-year — well below India’s previous trajectory and far behind Vietnam and Bangladesh.
Losing ground to Vietnam
Data from CITI and OTEXA show India is losing market share to Vietnam. Between January and June 2025, India’s textile exports to the US stood at $5.36 billion, while Vietnam’s rose 18.5% to $8.54 billion. India’s monthly exports fell from $860 million in January to $770 million in June.
Adding to exporters’ woes, an additional MFN duty of 1–14% will take effect on August 28. Combined with the 50% tariff, total duties on Indian textiles in the US could climb to 59–64%, according to the Global Trade Research Initiative (GTRI).
“India can absorb the shock as over 60% of our textile output is consumed locally,” said Ajay Srivastava, founder of GTRI.
Exporters, however, hope the additional 25% tariff is temporary. A. Sakthivel, chairman of the Apparel Export Promotion Council and honorary chairman of the Tiruppur Exporters Association, said:
“I believe it is only a matter of two to three weeks before the additional 25% is rolled back.”
Diversification attempts
India is looking to diversify markets through new trade agreements. A free trade pact with the UK has already been signed, and another with the EU is expected soon. Subramanian said these deals could help offset nearly 50% of losses. “But an early resolution of tariff issues with the US remains critical,” he added.
Others are less optimistic. CITI noted that potential benefits from the UK FTA will likely materialize only from 2026.
Representatives from the Tiruppur Exporters Association, the Federation of Indian Export Organisations, and the Apparel Export Promotion Council have sought a meeting with Prime Minister Modi to discuss their concerns.
Meanwhile, the Union government has waived the 11% import duty on cotton between August 19 and September 30, giving manufacturers temporary access to cheaper, high-quality cotton. However, industry players note that the relief is short-lived, as the exemption lasts only 40 days, and India imports only long-staple cotton (over 26mm) that is grown in limited quantities domestically.