India’s textile and apparel (T&A) industry is bracing for a sharper downturn in the January–March 2026 quarter and further job losses, as exporters warn that the continuing impact of US tariffs could prove more damaging than earlier disruptions, including the pandemic period, according to a survey conducted in December 2025 by the Confederation of Indian Textile Industry (CITI).
The survey, titled Navigating the US Tariff Challenge: Industry Survey Based Policy Recommendations, found that nearly one-quarter of respondents reported a turnover decline of more than 50% in the October–December 2025 quarter compared with the preceding quarter. More significantly, a majority of exporters expect a further contraction of up to 50% in the January–March 2026 period, indicating that the worst of the downturn may still lie ahead.
Industry representatives cautioned that prolonged revenue stress could translate into job losses, particularly in labour-intensive segments dominated by micro, small and medium enterprises (MSMEs). The survey highlighted limited capacity for exporters to absorb sustained external shocks, noting that diversification into alternative markets remains below 10% of impacted products.
According to the study, the imposition of an additional 25% ad valorem tariff, along with a 25% penalty duty—effectively raising the tariff burden to 50%—has severely eroded India’s competitiveness in the US, its largest export market for textiles and apparel. As a result, around 60% of respondents reported that export orders had been shifted to competing countries such as Bangladesh and Vietnam, which benefit from relatively favourable trade conditions.
The findings suggest that the shift is not merely a temporary diversion of orders but part of a broader reconfiguration of global sourcing decisions, with US buyers increasingly reallocating volumes away from Indian suppliers. Respondents reported sharp increases in order reductions (82.6%), discount demands (73.9%), and cancellations or postponements (48%), underscoring the severity of the demand shock.
While the impact has been felt across the value chain, the burden has fallen disproportionately on MSMEs, which accounted for 59% of survey respondents. These firms, which also represent the sector’s largest employers, face heightened vulnerability due to limited financial buffers and heavy reliance on export-linked cash flows.
