The garment industry in India is starting to reduce its dependence on the United States after higher import tariffs disrupted business with American retailers. This disruption caused a high level of uncertainty for exporters. Many major clothing manufacturers are now looking toward Britain, Europe, the Middle East, and India’s growing domestic market to protect their businesses and maintain sales.
The change follows tariff increases introduced by U.S. President Donald Trump‘s administration in 2025, when duties on Indian products rose to as much as 50%. The decision placed a considerable amount of pressure on Indian manufacturers—especially those that depended heavily on American buyers. Some retailers even cancelled their orders, while others demanded lower prices to compensate for the additional costs. This left manufacturers struggling to protect their profits, with some facing demands to absorb part of the new import charges.
Orient Craft is one company that has made significant changes. As a major Indian garment exporter, the United States previously accounted for approximately 84% of its sales. However, founder Sudhir Dhingra has since redirected much of the company’s business toward Britain, Europe, and India. The American market now contributes less than 10% of its revenue.
Its factory in Ranchi, located in the eastern state of Jharkhand, now produces clothing for British retailers, including Next and Marks & Spencer. After experiencing cancelled orders and requests for discounts, the company reduced its exposure to American customers. Although the possibility of improved trade relations remains, Dhingra believes that depending too heavily on one country could create further problems for the business.
Gokaldas Exports, a major Indian clothing manufacturer, is planning to expand its presence in Europe. The company, which employs more than 53,000 people, currently derives roughly 15% to 16% of its revenue from European markets. Its managing director, Sivaramakrishnan Ganapathi, wants to increase this share to between 25% and 30% over the next three to five years. At the same time, the company aims to reduce its revenue contribution from the United States from 50%–55% to approximately 35%–40%.
Export figures clearly indicate why manufacturers are reconsidering their strategies. Between April and August of this year (2026), India’s textile, clothing, and home furnishing exports to the United States declined by 9.8%, dropping to around US$4 billion. During the same period, exports to other international markets increased by 3.7%, reaching US$15.2 billion. These figures suggest that Indian businesses are gradually finding more opportunities beyond their traditional American customer base.
Trade agreements are also helping manufacturers explore alternative markets. The trade agreement between India and the United Kingdom, which came into effect in July 2026, provides Indian textile and clothing products with duty-free access to the British market. This gives Indian exporters a greater opportunity to compete with suppliers from countries that previously enjoyed lower import duties. India is also actively working toward a trade agreement with the European Union, which could reduce tariffs on clothing exports and make Indian products much more competitive in European markets. Countries such as Germany, France, Italy, and the Netherlands are becoming key targets for Indian exporters, with the United Arab Emirates also attracting considerable attention. However, manufacturers will still need to adapt to different consumer preferences, quality standards, and delivery requirements when entering these new markets.
Companies are also looking for ways to reduce production costs. Ranchi is becoming an attractive location for garment manufacturing because of government incentives, easier access to land, and an available workforce. Gokaldas Exports already operates two factories in the area and plans to establish another facility, potentially creating thousands of additional jobs.
India’s domestic clothing market provides another source of support. Valued at approximately US$150 billion and growing by 7% to 8% annually, it offers manufacturers an opportunity to sell more products locally instead of relying entirely on overseas customers.
Despite these changes, Indian exporters do not plan to abandon the American market completely. The United States remains an important destination because of its large consumer base and established relationships with Indian suppliers. However, recent tariff disputes have encouraged businesses to reconsider how heavily their future depends on a single trading partner.
This shift marks a significant change in India’s garment industry. Rather than treating tariff increases as a temporary problem, manufacturers increasingly view market diversification as a long-term business strategy. Their ability to establish new trade relationships, control production costs, and compete internationally will play a vital role in determining the industry’s future.
