Major US retailers, including Walmart, Amazon, Target, and Gap, have begun suspending imports of apparel and textile products from India. This action comes after US President Donald Trump imposed a 50 percent tariff on Indian goods, as reported by agencies.
In another development, New Delhi has decided to put on hold its plans to procure new US weapons and aircraft. This decision, according to three Indian officials familiar with the matter, marks India's first concrete sign of discontent following the tariffs imposed on its exports.
India is the sixth-largest exporter of textiles and apparel in the world. With higher tariffs on Indian goods, the US retailers may move to Bangladesh and Vietnam, which face a 20 per cent tariff.
"The proposed 50 per cent tariff will increase the cost of Indian apparel by 30 to 35 per cent compared to alternatives from countries like Bangladesh and Vietnam," Rahul Mehta, the chief mentor of the Clothing Manufacturers Association of India, which represents around 20,000 manufacturers and exporters, said.
NDTV Profit, citing industry sources, reported that Indian exporters have received letters and emails from American buyers instructing them to hold shipments of apparel and textile products until further notice.
The retailers, unwilling to absorb the additional duty, are seeking to pass the extra cost onto exporters, it added.
With costs rising by an estimated 30 percent to 35 per cent due to the tariff hike, exporters warn that US-bound orders could fall by 40 percent to 50 percent.
The impact may cause losses ranging from $4 billion to $5 billion.
Major Indian exporters such as Welspun Living, Gokaldas Exports, Indo Count and Trident rely heavily on the US market, with 40 per cent to 70 per cent of their sales tied directly to American retailers.
The US is also the biggest export destination for India's textile and garment industry.
In the financial year ending March 2025, 28 percent of India's total $36.61 of textile and garment exports went to the US.
Meanwhile Reuters added India had been planning to send Defence Minister Rajnath Singh to Washington in the coming weeks for an announcement on some of the purchases, but that trip has been cancelled, two of the people said.
Trump on Aug 6 imposed an additional 25 percent tariff on Indian goods as punishment for Delhi's purchases of Russian oil, which he said meant the country was funding Russia's invasion of Ukraine. That raised the total duty on Indian exports to 50 percent - among the highest of any US trading partner.
The president has a history of rapidly reversing himself on tariffs and India has said it remains actively engaged in discussions with Washington. One of the people said the defence purchases could go ahead once India had clarity on tariffs and the direction of bilateral ties, but "just not as soon as they were expected to."
Written instructions had not been given to pause the purchases, another official said, indicating that Delhi had the option to quickly reverse course, though there was "no forward movement at least for now." Post publication of this story, India's government issued a statement it attributed to a Ministry of Defence source describing news reports of a pause in the talks as "false and fabricated." The statement also said procurement was progressing as per "extant procedures."
Delhi, which has forged a close partnership with America in recent years, has said it is being unfairly targeted and that Washington and its European allies continue to trade with Moscow when it is in their interest.
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