The Cost of New US Tariffs Would Fall First on Migrant Workers in India

A year after the last round of US tariffs cost Indian garment workers shifts, wages and jobs, a fresh US duty has been imposed and suspended in the same order, leaving the threat in place. The textile industry's main lobby group says the sector is already under stress, with apparel exports still below last year's level and production concentrated in small firms that have little room to absorb sudden new costs.

Richa Bansal

20 October 2026

6 minutes

Long Story, Cut Short

Rising textile shipments conceal a garment trade still below last year's level, the segment where small firms and wage employment are concentrated.
Factories absorbed the 2025 tariff through lost shifts and departing migrants, leaving clusters with thinner reserves for another round.
Clusters heavily dependent on American buyers would feel any new duty far more sharply than national totals suggest.

Workers who travel across states for garment jobs are often the first released when orders fall, making migration patterns an early indicator of trade stress.

Migrant Risk Workers who travel across states for garment jobs are often the first released when orders fall, making migration patterns an early indicator of trade stress. AI-Generated / magnific

India's textile industry meets the latest US tariff threat with its garment arm still below last year's level and most of its capacity in small firms. The Sanctioning Russia and Iran Act provided for duties of up to 100% on the largest buyers of Russian energy. A US executive order of 16 October imposed that duty and waived it in the same text, with no end date.

On 19 September, Ashwin Chandran, chairman of the Confederation of Indian Textile Industry (CITI), said any additional tariffs under the Act "will be very difficult to absorb". He described the sector as "MSME-dominated" and "already under stress due to several factors, including the continuing turmoil in West Asia". The phrase "already under stress" places the strain before the threat, not after it.

CITI's latest export figures bear that out. Apparel exports were 6.19% lower in April–September 2026 than a year earlier, even as combined textile and apparel exports rose 2.38%. Garments are the part of the industry still losing ground.

The market most exposed to the new threat is also the industry's largest. India's textile and apparel exports to the United States, including handicrafts, were worth $10.94 billion in 2024–25, and CITI describes the US as the sector's single largest overseas destination. A duty there would strike the buyer on which the industry depends most, at a time when its most labour-intensive line is in decline.

Small firms hold most of that exposure. By CITI's own account, the industry is dominated by micro, small and medium enterprises. Such firms typically hold the least capital to meet a sudden rise in costs, and have the fewest options for redirecting output at short notice, whether to other buyers or to other markets. Their position shapes how any new duty would travel through the industry.

Whether the sector could withstand that duty, should the waiver be withdrawn, depends on the margin the last round of duties left behind. Six months of export data give little sign that it has been rebuilt.

Two Industries, One Total

The monthly figures CITI published in September show an industry moving in two directions at once. In August 2026, combined textile and apparel exports rose 6.39% from a year earlier, a number that would read as recovery on its own. Beneath it, textile exports climbed 13.03% while apparel fell 2.74%. Across the five months from April, textiles were up 6.94% over the same period in which garments contracted. The headline growth belongs almost entirely to one half of the industry.

September moved sharply the other way. Apparel exports rose 13.68% and textiles 19.87%, lifting combined exports 17.51% for the month. The comparison month probably explains part of the swing: September 2025 was the first full month in which Indian goods faced a 50% US duty. Garment shipments typically follow orders placed months earlier, so the rebound says little yet about how buyers have responded to the new law. Over April–September, apparel remained below last year's level while textiles rose 9.05%, which means the gap between the two halves has narrowed without closing.

That gap reflects how differently the two halves are built. Textiles in these figures include intermediate goods such as yarn and fabric (alongside made-ups, carpets and handicrafts), and much of the yarn and fabric comes from mills that can redirect output across buyers and markets. Apparel is a finished, labour-intensive product, made to the specifications of particular brands and shipped in seasonal cycles. A mill can often sell yarn at home or to garment makers abroad when one market softens. A garment unit dropped by a US brand has fewer immediate substitutes. Garments also convert orders into wages most directly.

The industry's structure places the weaker half in its most fragile layer. Nearly 80% of the sector's capacity is spread across MSME clusters, where firms tend to operate with modest capital and narrow product ranges. Losses concentrated in garments fall hardest on these units. They have the least room to absorb lost orders or to hold stock while buyers wait.

Market concentration narrows the alternatives further. On the same basis, exports to the European Union were worth $7.6 billion in 2024–25 and to the United Kingdom $2.16 billion, so the United States alone took more than the two combined. Chandran has said the new trade agreements "offer a lot of potential", but that "the gains from those are not automatic for exporters and will take time to materialise". The caution comes from the industry's own lobby. It suggests that neither Europe nor Britain yet offers a ready substitute for American orders.

If the waiver is withdrawn, the duty would therefore meet the industry where its growth is weakest. Garments would bear the initial effect, and within garments the firms with the least capital to spare.

The industry's structure places the weaker half in its most fragile layer. Nearly 80% of the sector's capacity is spread across MSME clusters, where firms tend to operate with modest capital and narrow product ranges. Losses concentrated in garments fall hardest on these units. They have the least room to absorb lost orders or to hold stock while buyers wait.

Wages Took the Strain

The last US tariff increase offers the clearest record of how a trade shock travels through India's textile clusters. After Washington raised duties on Indian goods in 2025, workers in Karnataka faced furloughs, reduced shifts, early leave before Diwali, pay cuts and frozen overtime pay. In Tamil Nadu's Tiruppur cluster, layoffs became routine and some factories shut, and by the Asia Floor Wage Alliance's estimate thousands of migrant workers left. The adjustment fell on hours and wages first.

Workers measured that adjustment on a different clock from the one that governs trade policy. Raju B. Chikkanarasaiya, general secretary of the Karnataka State Garment and Textile Workers Union, said that "for us even one month is a lifetime. We can't survive without wages that long, it has become like Covid again." The comparison counts the tariff in weeks without pay, not in lost shipments.

In Tamil Nadu, Janaki S, a leader at the Garment and General Workers Union, was blunter about migrant labour. "They're the first to lose jobs," she said, adding that migrants have less union representation and "don't speak Tamil, so factories can fire them without much pushback." Her account suggests why the adjustment came so fast.

Buyers set the terms within which factories made those choices. Anant Ahuja, head of sustainability at Shahi Exports, one of India's largest garment makers, said the company decided to absorb the 25% duty to protect long-term buyer relationships. Where suppliers carry a tariff themselves, the cost moves down the chain towards the most flexible expense they control. In these clusters, that expense is migrant labour.

Tiruppur shows how far the adjustment went. The town's garment industry employs about one million workers (roughly half of them migrants), and August to December 2025 brought closures and job cuts. A temporary recovery followed in early 2026, and Dinesh Babu Ravikrishnan, executive secretary of the Tiruppur Exporters' Association, called the year "a roller-coaster ride". Exports still reached a record ₹46,000 crore in 2025–26. The record measures shipments, not the workforce restructuring that continued behind them.

Panipat illustrates a different version of the same exposure. Its trade is in carpets, mats and home textiles, a labour-intensive corner of the textiles category. Of the town's export turnover, estimated in April 2025 at about ₹20,000 crore, roughly half, mainly carpets and mats, goes to the United States, and one exporter estimates that the cluster employs 8–10 lakh workers. Dependence on that scale leaves a single town heavily exposed to any further US duty.

Those conditions give CITI's phrase "already under stress" its specific content: wages lost, migrants departed and units closed during the last round of duties. None of the three registers in the export figures CITI released.

Support Against the Clock

CITI has asked for urgent engagement between New Delhi and Washington so that exporters, particularly MSMEs, are not disadvantaged, and for a fair, balanced and equitable bilateral trade agreement. Its own figures indicate where any new duty would land first: in apparel, in clusters of small firms and among the migrant workers released in 2025. If the waiver is withdrawn before next season's orders are placed, the clusters will meet the duty with whatever margin the last round left them.

Inside India's Knitwear Capital

Tiruppur accounts for nearly 60% of India's knitwear exports, making it the country's dominant knitwear cluster.
Around 35% of Tiruppur's exports went to the United States in 2025, leaving the cluster heavily tied to American buyers.
Knitwear exports from the cluster rose sharply to about ₹44,000 crore in 2024–25, up from ₹33,400 crore a year earlier.
Exporters began courting buyers in the Gulf in late 2025, where India's Comprehensive Economic Partnership Agreement with the UAE gives them an opening.
Some units are diversifying into a mix of cotton and man-made-fibre products, and introducing automation to cut costs.

Labour, Clusters and Markets

The textile sector is among India's largest employers, with 45 million direct jobs and 100 million allied.
India's four labour codes took effect on 21 November 2025, consolidating earlier labour laws into a new framework.
A Panipat exporter wrote in September 2025 that existing orders were on hold and no new business had come in.
Panipat is a major textile recycling centre, handling more than one lakh tonnes of textile waste.
The India-UK trade agreement took effect on 15 July 2026, while the EU pact is expected next year.

Richa Bansal

RICHA BANSAL has more than 30 years of media industry experience, of which the last 20 years have been with leading fashion magazines in both B2B and B2C domains. Her areas of interest are traditional textiles and fabrics, retail operations, case studies, branding stories, and interview-driven features.

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