• India faces a dramatic 50% tariff on garment exports to the US, prompting panic among manufacturers.
• Exports to the US are significantly threatened as buyers demand production shifts to countries with lower tariffs.
• Manufacturers like Pearl Global scramble to maintain business ties by relocating production abroad.
• Concerns arise over the impact on India's "Make in India" initiative amid declining confidence in the garment sector.
• US clients are placing orders on hold, raising fears of long-term economic repercussions for Indian exporters.

The recent 50% tariff imposed by the US on Indian garments has sent shockwaves through the country's export sector. Pearl Global, which supplies major US retailers such as Gap and Kohl's, has been inundated with calls from clients urging them to either absorb the costs or relocate production to alternate countries. Managing Director Pallab Banerjee stressed that "all the customers are already calling me. They want us to shift from India to the other countries," as initial hopes for growth in exports were quashed by the new tariff measures, according to TRT World and Reuters.

The tariff consists of a 25% fee already in effect, followed by another 25% set to take effect later this month, specifically targeting India's continued purchases of Russian oil. This has positioned Vietnam and Bangladesh at a competitive advantage with their respective 20% tariffs, while China faces a 30% tariff. This shift in trade relations has left India's garment sector under pressure to adapt quickly, with many manufacturers considering moving production to countries like Ethiopia and Nepal, as indicated by interviews with industry leaders from Reuters and Jakarta Post.

The Indian garment industry, which heavily relies on the US market—approximately 95% of RichaCo Exports' annual revenue comes from US clients—is now looking for ways to navigate the crisis. Dinesh Raheja, general manager of RichaCo Exports, pointed out, "we're exploring setting up a manufacturing base in Kathmandu," reflecting the dire conditions as the industry faces an urgent need to reduce costs due to the tariffs, according to TRT World, Reuters, and Jakarta Post.

As panic sets in within key Indian garment hubs like Tiruppur, which produces nearly one-third of the country’s apparel exports, several manufacturers have been advised to halt pending orders, as the risk of further losses looms. Factory executives report that customers are asking them to delay production or find alternatives as they try to mitigate the new tariff burdens, emphasizing how unpredictable and unstable the current market has become for Indian exporters, according to Reuters and Jakarta Post.

The drastic changes brought about by these tariffs have created a challenging environment for the Indian garment industry, hampering growth and standing in stark contrast to the Indian government’s "Make in India" initiative. Exporters are compelled to adapt to survive amid a bidding war for lower costs, which reflects the growing need for strategic shifts in manufacturing locations as pressure from US buyers intensifies, further complicating India's position in the global supply chain, as noted by TRT World, Reuters, and Jakarta Post.