Textile & Apparel industry braces for ‘sharper downturn’ in March quarter

New Delhi: India’s Textile and Apparel (T&A) industry is bracing for a sharper downturn in the January–March 2026 quarter and further job losses, with exporters warning that the ongoing impact of US tariffs could prove more damaging than earlier disruptions, including the pandemic period, according to a survey conducted in December 2025 by the Confederation of Indian Textile Industry (CITI).

The survey, titled 'Navigating the US Tariff Challenge: Industry Survey Based Policy Recommendations', showed that nearly one-fourth of respondents reported a turnover decline of more than 50 per cent in October–December 2025 compared to the previous quarter. More significantly, a majority of exporters anticipate a further contraction of up to 50 per cent in the January–March 2026 period, signalling that the worst may still lie ahead.

The looming risk, industry representatives caution, is that prolonged revenue stress could translate into job losses, particularly in labour-intensive segments dominated by micro, small, and medium enterprises (MSMEs). With diversification into alternative markets remaining below 10 per cent of impacted products so far, the survey highlights the limited room exporters have to absorb sustained external shocks.

According to the study, the imposition of a 25 per cent additional ad valorem tariff along with a 25 per cent penalty duty, effectively raising the tariff burden to 50 per cent, has severely eroded India’s competitiveness in the US, its largest export market for textiles and apparel. As a result, around 60 per cent of respondents reported shifting export orders to competing countries such as Bangladesh and Vietnam, which enjoy relative trade advantages.

The survey suggests that it is not a temporary diversion of orders but a reconfiguration of global sourcing decisions, with US buyers increasingly reallocating volumes away from Indian suppliers. Sharp increases were reported in order reductions (82.6 per cent), discount demands (73.9 per cent), and cancellations or postponements (48 per cent), underscoring the intensity of the demand shock.

While the impact cuts across the value chain, the burden has fallen disproportionately on MSMEs, which accounted for 59 per cent of the survey respondents. These firms, which are also the sector's largest employers, face heightened vulnerability due to limited financial buffers and dependence on export-linked cash flows.