Tariffs and Iran war threaten India’s $100 billion garments export goal
Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest growing large economy.
Just as India’s textile industry was beginning to stabilize after U.S. tariffs, it received another blow. Industry leaders tell me the Iran war has raised costs, hit demand and sent workers fleeing, crushing hopes of a sustained recovery.
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The big story
In this photograph taken on September 23, 2025, employees work at a garment factory in Tiruppur, in India’s southern state of Tamil Nadu.
R. Satish Babu | Afp | Getty Images
Indian textile exporters could be forgiven for thinking that U.S. President Donald Trump has them in his crosshairs.
In August last year, Washington slapped a 50% tariff on Indian goods, making exports uncompetitive. Relief came months later, when rates were slashed in February, but it lasted barely a few weeks: Trump’s subsequent war on Iran plunged India’s textile industry into fresh turmoil.
Ready-made garment companies were among the worst-hit by the U.S. tariffs, losing orders or being forced to offer discounts to retain customers, experts said, adding that the Iran war has driven up raw material and packaging costs.
The war, which began on Feb. 28 after the U.S. and Israel struck Iran, has disrupted the movement of goods through the Strait of Hormuz, driving up energy and freight costs and straining supply chains.
This has led to some unusual challenges for the textile industry, India’s second‑largest employer which supports more than 45 million jobs.
Industry leaders said some migrant workers employed by the textile companies were struggling to secure liquified petroleum gas, the primary cooking fuel. This has prompted some to return to their home towns.
The second blow
“It was a tough year, and just when things were starting to come together in February, this war started,” Ashwin Chandran, chairman of the Confederation of Indian Textile Industry, told CNBC.
Between April 2025 and February this year, India exported cotton and man‑made yarns, fabrics, and ready-made garments worth $29.5 billion, down from $29.8 billion a year earlier, according to data from the Indian commerce ministry. While the decline may appear modest, the direction of travel is worrying for a country that aims to export $100 billion worth of textiles annually by 2030.
“We were expecting FY27 [financial year ending March 2027] to be much better, but now, with the Iran war, the beginning hasn’t been encouraging,” said Madhu Sudhan Bhageria, chairman at synthetic and polyester filament yarns manufacturer Filatex India.
He explained that polyester prices — which depend on petroleum — have risen more than 40% since the start of the war, making it difficult to pass on costs to customers.
“Demand has fallen as people don’t want to buy at high prices,” Bhageria said,…
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