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Simply as India’s textile business was starting to stabilize after U.S. tariffs, it obtained one other blow. Trade leaders inform me the Iran struggle has raised prices, hit demand and despatched staff fleeing, crushing hopes of a sustained restoration.
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The massive story
On this {photograph} taken on September 23, 2025, workers work at a garment manufacturing facility in Tiruppur, in India’s southern state of Tamil Nadu.
R. Satish Babu | Afp | Getty Photographs
Indian textile exporters may very well be forgiven for pondering that U.S. President Donald Trump has them in his crosshairs.
In August final yr, Washington slapped a 50% tariff on Indian items, making exports uncompetitive. Aid got here months later, when charges had been slashed in February, but it surely lasted barely a couple of weeks: Trump’s subsequent struggle on Iran plunged India’s textile business into recent turmoil.
Prepared-made garment firms had been among the many worst-hit by the U.S. tariffs, shedding orders or being pressured to supply reductions to retain prospects, consultants stated, including that the Iran struggle has pushed up uncooked materials and packaging prices.
The struggle, which started on Feb. 28 after the U.S. and Israel struck Iran, has disrupted the motion of products by the Strait of Hormuz, driving up vitality and freight prices and straining provide chains.
This has led to some uncommon challenges for the textile business, India’s second‑largest employer which helps greater than 45 million jobs.
Trade leaders stated some migrant staff employed by the textile firms had been struggling to safe liquified petroleum fuel, the first cooking gasoline. This has prompted some to return to their residence cities.
The second blow
“It was a troublesome yr, and simply when issues had been beginning to come collectively in February, this struggle began,” Ashwin Chandran, chairman of the Confederation of Indian Textile Trade, informed CNBC.
Between April 2025 and February this yr, India exported cotton and man‑made yarns, materials, and ready-made clothes price $29.5 billion, down from $29.8 billion a yr earlier, based on information from the Indian commerce ministry. Whereas the decline might seem modest, the route of journey is worrying for a rustic that goals to export $100 billion price of textiles yearly by 2030.
“We had been anticipating FY27 [financial year ending March 2027] to be significantly better, however now, with the Iran struggle, the start hasn’t been encouraging,” stated Madhu Sudhan Bhageria, chairman at artificial and polyester filament yarns producer Filatex India.
He defined that polyester costs — which rely on petroleum — have risen greater than 40% because the begin of the struggle, making it tough to move on prices to prospects.
“Demand has fallen as individuals do not wish to purchase at excessive costs,” Bhageria stated, including that fears of a sudden finish to the struggle have left firms cautious of being caught with costly inventories if costs fall sharply.
If firms fail to move on larger prices, consultants warned, manufacturing cuts will observe.
In a short lived aid, the U.S. and Iran agreed to a ceasefire on Wednesday, with Tehran saying secure passage for ships could be “doable” for the subsequent two weeks in coordination with the nation’s armed forces.
Even so, firms corresponding to Filatex have already minimize manufacturing by 25% and are ready for demand to return.
Demand considerations
India is the world’s sixth‑largest textile exporter, and after signing commerce agreements with the U.Okay. final yr, and the EU and U.S. earlier this yr, the business was anticipating a pointy restoration. Thus far, nonetheless, it would not appears to be the case.
“We now have been concentrating on progress of round 12% to fifteen% CAGR [compound annual growth rate],” stated Pallab Banerjee, managing director of Pearl World Industries, which provides clothes to JCPenney, Macy’s, and Walmart. However for the monetary yr ending March 2026, progress is averaging decrease at round 9%, he stated.
Specialists say ready-made garment firms are managing to move on some prices to their prospects within the U.S., however there stays concern that demand will sluggish if oil costs in the united statesrise additional.
Whereas the easing of Trump’s tariffs in February got here as a aid, Banerjee warned {that a} extended struggle may dampen U.S. shopper demand, as was the case with the outbreak of the Ukraine struggle in 2022.
That battle led to slowing retailer gross sales, rising inventories, and important challenges for U.S. retailers, he stated, including: “Nobody desires a repeat of that.”
For now, the delicate ceasefire has cooled oil costs to under $100 per barrel. However they continue to be nicely above pre‑battle ranges, retaining strain firmly on prices and demand. With out lasting peace, India’s textile exporters face one other yr of survival quite than progress.
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