Double Jeopardy / Indian Exports / PART III Analysis

Wireframe: Indian Textiles Under Oil Pressure

The Orders China Released Found Homes Everywhere Except in Indian Factories

The shift of US apparel sourcing away from China has largely benefited Vietnam, which became America's top garment supplier in 2025. India's share of global apparel exports has barely moved in fifteen years, and its US shipments fell sharply this year while, for most of the year, it paid the same duty as Vietnam or more, suggesting that capacity rather than duty rates decides orders.

Richa Bansal

21 October 2026

6 minutes

Long Story, Cut Short

Buyers leaving China placed orders where capacity already existed, which favoured Vietnam and Bangladesh and largely bypassed Indian suppliers.
India kept losing US apparel orders while paying the same duty as Vietnam or more for most of the year, so tariff rates have not been decisive.
Indian groups with plants abroad can keep their buyers while moving production, so lost orders may never return to India.

Global buyers reducing their dependence on China have redistributed tens of billions of dollars in apparel orders, rewarding suppliers able to scale production quickly and reliably.

SOURCING SHIFT Global buyers reducing their dependence on China have redistributed tens of billions of dollars in apparel orders, rewarding suppliers able to scale production quickly and reliably. AI-Generated / magnific

The US apparel market, which a 100% US duty on large buyers of Russian oil threatened to shut to India before an executive order waived it on 16 October, has already been reorganised, largely around Vietnam. In 2025 Vietnam overtook China as the largest supplier of apparel to the United States, with 21.5% of imports by value, ending China's long hold on that position. American buyers had been moving away from Chinese factories for years.

India's position has barely moved. Its share of global apparel exports has stayed at about 3% since 2010, through fifteen years in which the global sourcing map was redrawn around it. Whatever opportunity that redrawing created, India captured little of it. The stagnation predates every tariff now under discussion.

This year the gap widened. In January–August 2026, US apparel imports from India fell 26.44%, against a decline of just 0.76% for Vietnam. India lost more than a quarter of its US apparel trade by value in eight months. The market as a whole contracted far less.

Part of that fall reflects the tariffs India carried into the year. Indian goods faced a 50% US duty until early February and 25% until late February, against Vietnam's 20%. The rest of the year is harder to reconcile with the losses. From late February, after the Supreme Court struck down the earlier reciprocal duties, India and Vietnam paid the same 10% global tariff. Only since 24 July has India paid less, at 10% against 12.5%.

For most of 2026, then, India lost share while paying the same duty as Vietnam or more. When India paid more, it lost orders; when the duties were equal, it kept losing them. Timing alone struggles to explain a divergence of this size, or its persistence once duties equalised.

If tariff rates do not account for where American buyers have placed their orders, the explanation lies in what Vietnam and its neighbours built before the current duties were set. India's new 2.5-point edge is too recent to register in the data, which run only to August. Whether it can shift any of that remains open.

A Decade of Drift

The reallocation of global apparel sourcing has been running for more than a decade, and its direction is now clear. China's share of world apparel exports fell from 36.9% in 2010 to 27.3% in 2025, releasing what a PL Capital report puts at "US$50-60bn in floating volume" into the global sourcing market. Over the same period, Bangladesh and Vietnam together rose from about 7% of world exports to more than 13%. Much of the share China shed went to those two countries, and little of it to India.

The United States has seen the same movement in compressed form. China's share of US apparel imports fell to 13.7% in 2025 from 20.9% a year earlier, as the value of Chinese shipments dropped 35.6%, its worst performance since the pandemic. Vietnam did not simply benefit from that decline. It was positioned to replace China as the market's leading supplier within a single year.

India's own record in 2025 was not one of collapse. Its apparel exports to the United States rose 5.5% over the year, despite tariffs of 50% from late August. That growth came from a small base and trailed the gains of Cambodia (up 27%), Pakistan (10.8%) and Indonesia (9.7%). Growth that leaves a country's share of a reshuffling market essentially unchanged amounts to standing still.

Vietnam's scale helps explain where the orders went. The country's textile and garment exports were estimated at about $46 billion in 2025 (up 5.6%), and its industry association has set a target of $64.5 billion by 2030. Those are the ambitions of an industry planning for continued expansion. They rest on production lines able to take on large orders without delay.

The first eight months of 2026 widened the divide. Total US apparel imports fell 7.42% to $49.08 billion, yet Cambodia grew 6.91%, Indonesia 2.58% and Bangladesh slipped only 4.43%. China's shipments fell 29.39%, extending the previous year's slide. India's fall was steeper than that of every major supplier except China. Buyers cutting overall purchases appear to have protected their established suppliers in South-East Asia and Bangladesh, and India's losses place it outside that group.

The pattern points to a structural lag, not a sudden reversal. Buyers diversifying away from China placed their orders where production capacity, delivery speed and established relationships were in place, and in most cases that meant Vietnam and Bangladesh. India entered 2026 some distance behind both, with a share of world exports no larger than in 2010.

If tariff rates do not account for where American buyers have placed their orders, the explanation lies in what Vietnam and its neighbours built before the current duties were set. India's new 2.5-point edge is too recent to register in the data, which run only to August. Whether it can shift any of that remains open.

Buyers Follow the Supplier

The current duty schedule gives India a narrow edge over Vietnam and none over most other rivals. Under the Section 301 duties on forced-labour enforcement, in force since 24 July, India pays 10% alongside Bangladesh, Cambodia, Indonesia and Pakistan, while China and Vietnam face 12.5%. The same action created tariff-rate quotas (for Bangladesh, Cambodia, Indonesia and Malaysia, to be based on their imports of US inputs) that give several rivals a route to lower duties India lacks. Against Bangladesh, Cambodia and Indonesia, those quotas could leave India at a disadvantage.

Vietnam's lead was not built on preferential access. Its framework with Washington, announced in October 2025, was not a free trade agreement. It kept the 20% reciprocal tariff on most Vietnamese goods, with only some products earmarked for a cut to zero, and a separate 40% penalty on transshipped goods predated it. That 20% duty lapsed only with the Supreme Court ruling in February 2026.

The duty record on both sides leaves little support for the assumption that rates decide sourcing. Rates can tilt a decision at the margin, and India's new edge over Vietnam may yet do so. They have not overturned advantages built before the current duties were set.

New Delhi's negotiators still treat the rate as the main prize. Trade minister Piyush Goyal said on 15 October that India would operationalise the first tranche of a US deal only "once we get comparable advantage or competitive advantage over our peer countries".

Indian exporters have not waited for that outcome. Pearl Global, an Indian garment group, listed 25 manufacturing units in July 2025 (eight in India, nine in Bangladesh, five in Vietnam, two in Indonesia and one in Guatemala, partner facilities included). India accounted for about 26% of its capacity of 93.2 million pieces, Bangladesh for about 59%. For such a group, the location of production is a variable it can adjust.

The 2025 tariff increase showed how readily that variable moves. When duties on Indian goods rose sharply, US customers asked Indian garment makers to shift production out of India. Pearl Global's managing director said customers wanted the company to move, Raymond cited its factory in Ethiopia as an advantage, and RichaCo Exports began exploring a base in Nepal. The requests came from buyers. The responses came from Indian firms.

The consequence is easy to miss in national trade data. Orders that India loses as a production location may still be filled by Indian-owned companies operating in Bangladesh, Indonesia or Vietnam. Buyers keep the supplier they trust and change only the country of origin, which leaves little pressure to return to Indian factories.

If location can be adjusted this readily, the unit that matters to buyers is the firm, not the country. Indian-owned capacity outside India gives those firms a way to keep American customers whatever duty Indian goods carry.

What Relief Is Worth

Monthly US import data for the rest of 2026 will show whether India's slide in American apparel was a delayed echo of the 2025 tariffs or the start of a lasting reallocation, and whether a 2.5-point edge over Vietnam can slow it. A harder question sits beyond the data. Indian exporters with plants in Bangladesh, Indonesia and Vietnam can follow their buyers wherever costs point, and further US duties on India would give them another reason to. If production does not come home when conditions improve, tariff relief may restore India's rates without restoring its orders.

US Apparel Comes From

Vietnam shipped $9.37 billion of apparel to the US in January–July 2026, more than any other supplier.
Bangladesh edged ahead of China in the same period, with $4.66 billion against China's $4.56 billion.
Indonesia's $2.74 billion and Cambodia's $2.62 billion in January–July placed both above India, which shipped $2.45 billion.
The three largest suppliers lost combined share in 2025, falling to 45.7% of US apparel imports from 49.0%.
Chinese apparel became markedly cheaper in 2025, with unit prices falling 11.5% to about half the world average.

Vietnam's Growth Plan

Vietnam's textile and garment exports grew about 5.6% a year in compound terms from 2020 to 2025, despite a dip in 2023.
The industry recorded an estimated trade surplus of about $21 billion in 2025, according to VITAS.
About 52% of raw materials are now sourced within Vietnam, reducing reliance on imported inputs.
The association aims to lift domestic sourcing above 60% and reach $8–9 billion in home-market revenue by 2030.
Under the 2025 framework, Vietnam pledged preferential access for substantially all US industrial and agricultural exports.

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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