India's apparel exports are likely to take a hit due to the recent 50% US tariff hike, with potential revenue losses of 6-9% in FY2025-26.
The US and European markets account for a significant portion of India's apparel exports, with the US being the largest destination, representing 33-34% of total exports.
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Key Impacts:
Financial Pressure: Profit margins are expected to contract by 200-300 basis points as exporters absorb some of the tariff costs.
Loose Competitiveness: Indian garments become pricier than those from countries like Bangladesh and Vietnam, which face lower tariffs.
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Dominant Markets: The US and EU remain top destinations for Indian apparel exports.
Delayed Impact: The full effect of tariffs will be evident in H2 FY26, as earlier orders were largely unaffected.
Margin Contraction:
Indian exporters may struggle to pass on the combined 50% tariff, leading to further margin contraction.
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Mitigation Strategies:
Diversification: Companies with operations in countries like Sri Lanka, Bangladesh, and Vietnam may redirect orders.
Government Support: The sector expects government intervention to navigate these challenges, such as export incentives and credit assistance.
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CREDITS: This is an automated information generated by the internet and has not been edited and reviewed by us.
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