At ‘Manthan’ over 50% US tariffs, Delhi-NCR’s apparel industry brainstorms solutions to crisis

“Our industry is 80% dependent on the American market, so the hike came as a huge shock. Apparel exporters have been shipping there for decades, and suddenly we are staring at an uncertain future.”

“When I thought about this conference, the first idea was that we need a manthan — a churn. As of now, the government is not doing anything, so we needed to bring the industry’s think tanks onto one forum to realistically discuss the problems, challenges and how the industry can go ahead in this time of crisis together,” Marwah added.

The tariffs — first a 25% hike, followed by another 25% from August 27 — have shaken the foundations of a sector that employs millions. Apparel is India’s second-largest employer after agriculture. While the country ranks fourth globally in US textile exports, the hikes have left exporters staring at cancelled orders, mounting stock, and anxious workers.

At least a hundred exporters and buyers gathered at the CXO meet, tagged as a “manthan for fixed sourcing.” The idea was that by facing each other, the buyers can spell out their expectations and the exporters can counter them with ground realities.

To break the ice, organisers set up a round of “buyers vs exporters,” a rapid-fire game that made the tense room crackle with both laughter and unease.

Buyers called India’s biggest sourcing strength a “positive mindset,” while acknowledging that the push for sustainability in the Indian textile business was “real” and that the infrastructure was “getting stronger”.

But they flagged persistent concerns: “inconsistent” quality, “delayed” lead times, and a “missing diversity” in products. The tariff hikes have hit the textile industry at a time when India as a sourcing destination, they concluded, was still “evolving.”

Exporters, when their turn came, were asked which government policy had most changed the game. They replied in unison: “tariffs.” They admitted they must learn “scale” from Bangladesh and “quality” from Vietnam.

On automation, the room’s verdict was that it “needs to be real”.

When asked about their dream buyer or market, one exporter shot back: “Right now, US only,” prompting laughter in the background.

But humour quickly gave way to a harsher reality. “One exporter told me they may have to shut down factories and shift production out of India. What does that mean? A labour crisis, mass unemployment — and if the government is unable to find a solution to this tariff problem, then we need to draw the path forward. Let’s be clear — reducing GST here and there will not help. GST is not the solution,” Marwah said.

Lalit Thukral, president of the Noida Apparel Export Cluster, said, “If you go to the market today, the 12% GST slab is gone, a consumer buying a top or skirt [priced above Rs 2,500] will now have to pay 18% GST. But this is not what will rescue the industry,” he said.

“If our government instead put duties on Bangladeshi products — worth nearly Rs 96,000 crore in the Indian market — then brands would be forced to rely more on local sourcing. That would ease this tariff crisis for us.”

To retain its US customers, many textile exporters have been trading at huge discounts. The fear is that if US customers, who mostly give bulk orders, turn to another market, then it will be extremely difficult to get them back.

But adding to the pressure, exporters revealed that now their European buyers are also asking for discounts. “They ask, ‘If you have money to give discounts to the US, why don’t you give it to us?’” Thukral said.

This has put them in a bind: competing with tariffs in one market has led to expectations of price reductions in another.

The effect of these anxieties is already visible on the ground.

Noida, designated as a ‘Town of Export Excellence’ in 2021, houses units valued at nearly Rs 50,000 crore — a quarter of it tied to the US market. On production floors, however, exporters say that the machines now run at half capacity, fabrics are unsold, and owners spend days on negotiation calls with reluctant buyers.

Around 10 lakh people are employed in the cluster, and 60-70% of them are women — many first-generation industrial workers with decades of stitching and embroidery skills.

“If this crisis continues for two or three more months, a quarter of the factories here will shut down. That is lakhs of livelihoods gone — and imagine the social impact of that,” Thukral said.

Others at the meeting stressed that the way out lies in scale and technology. “Automation brings efficiency — and efficiency brings billions,” said Manish Ranade of Lectra, a company that provides cutting-room technology to apparel firms.

“Garments are made up of nearly 70% fabric. So when we cut wastage, we’re not saving scraps, we’re saving millions. That’s where automation helps: efficiency, wastage reduction, everything goes hand in hand,” added Ranada.

Marwah opined that the industry now needs to think beyond its current geography. “The biggest thing is scale. If we want to stay competitive, we have to expand capacities and move beyond Delhi-NCR,” she said, pointing to emerging textile clusters in Madhya Pradesh and Odisha.

“We need to start manufacturing in new clusters so that our landed cost is better than other countries. Sustainability is just one part of it. To strengthen the supply chain, we have to be cost-efficient, sustainable, certified, and produce the right product with the right sampling… Currently, the challenges are serious, but so is the opportunity.”

One participant summed up, “It is very easy to list problems, but finding solutions requires sharper conversations. Today was the start of that.”.