U.S. retail giants including Walmart and Costco are turning to India to offset rising tariffs on apparel imports from Bangladesh and China. However, a shortage of skilled labor in India’s textile hubs like Tiruppur is undermining efforts to meet growing demand.
India Gains Tariff Edge in U.S. Apparel Market
Retailers are looking to expand Indian garment exports as new U.S. tariffs—effective from July—raise duties on Bangladesh (37%), Vietnam (46%), and China (145%). India’s tariff stands at 26%, making its exports more competitive. This shift has triggered a surge in inquiries from U.S. brands seeking cheaper alternatives, particularly in Tiruppur, a hub that contributes nearly one-third of India’s $16 billion apparel exports.
Labour Shortages and Fragmented Operations Pose Challenges
Despite growing interest, India faces critical roadblocks. Factories in Tiruppur struggle to scale due to a shortage of skilled workers, high costs, and limited factory sizes. Manufacturers report difficulties in retaining labor, with workers often leaving for smaller, informal units offering higher pay and longer hours. Raft Garments, for example, is considering automation and expansion but lacks adequate staff to fulfill new orders.
Expert Views: Capacity and Cost Remain Key Obstacles
“Even if orders come, we need labour. We don’t have sufficient labour,”
– R.K. Sivasubramaniam, Managing Director, Raft Garments
“We need at least 100,000 workers,”
– Kumar Duraiswamy, Tiruppur Exporters’ Association
U.S. clients continue pressing for Bangladesh-level prices, which Indian exporters find hard to match due to higher wages ($180/month vs. $139/month in Bangladesh) and stricter worker policies. Mahesh Kumar Jegadeesan of Balu Exports confirmed U.S. buyers are firm on prices, making negotiations difficult.
Market Outlook: India’s Scaling Limitations Compared
In 2024, India exported $4.7 billion in apparel to the U.S., lagging behind China ($16.5B), Vietnam ($14.9B), and Bangladesh ($7.3B). While India’s average garment factory employs 600–800 workers, Bangladesh boasts capacities of 1,200 or more, giving it scale advantages. Industry leaders now aim to open units in labor-rich states to address these limitations.
Will India Convert Its Tariff Advantage Into Long-Term Gains?
With major U.S. retailers shifting focus toward India, the country has an opportunity to capture more of the global textile market. Yet without structural improvements in labor availability and scale, India’s Indian garment exports could struggle to meet expectations.
