A duty bigger than the margin
The United States put a 25% reciprocal tariff on Indian goods from 7 August 2025, and added another 25% later that month. From 27 August, a T-shirt shipped from Tiruppur paid 50% duty on arrival, on top of the normal customs duty.
Small exporters work on margins of about 8% to 15%. Exporters said that at best they could offer a 5% discount; any more and the order would be sold at a loss. Buyers began renegotiating orders already placed, and fresh orders slowed or stopped.
A 50% duty against an 8–15% margin leaves nothing to negotiate with.
Stock that could not move
By October 2025, goods worth ₹1,500 to 2,000 crore were stuck in factories, ports and warehouses. US buyers were asking for 20–25% off finished goods. The US took about 30% of Tiruppur’s knitwear exports, and units that sold only to America were hit hardest.
The exporters’ association asked for working-capital support, a return of the emergency credit guarantee scheme and more time before loans turn non-performing: 180 days instead of 90. Exporters began looking at Russia, Saudi Arabia, the UAE and Europe, knowing a new buyer takes six months to a year.
Lower duty, a new extra, and a record year anyway
In February 2026 an interim India–US framework cut the reciprocal rate to 18% and withdrew the extra 25%. From 24 July 2026 the US added a 10% Section 301 duty on non-exempt Indian goods. Meanwhile the UK made cotton T-shirts and vests duty-free from 15 July 2026, and an India–EU agreement was concluded but not yet in force.
Even so, Tiruppur’s exports for 2025-26 reached a record of about ₹46,000 crore, according to the exporters’ association. Totals can hide the strain: India’s garment exports fell 10.5% in dollar terms in April–July 2026, and small units with a single US buyer carried most of the damage.
Points for a finance reader
- Know your margin before you discount. A 5% discount on an 8% margin gives away more than half the profit on the order. Cost each style before agreeing.
- Value stuck stock honestly. Goods made for a buyer who now wants 20–25% off are worth less than their cost. Inventory is valued at the lower of cost and what it will now fetch.
- One buyer country is one risk. Units spread across the US, EU and UK had other orders to run while the US paused. Watch the share of your sales in any one market.