Written by The Banking Post
India’s readymade garment industry is bracing for a major slowdown as revenues are expected to grow by only 3–5 percent in FY26, almost half the pace of last year, according to Crisil Ratings.
The slump follows Washington’s decision to impose a 50 percent tariff on Indian garment imports starting August 27, 2025. The US is India’s largest market, accounting for one-third of the country’s USD 16 billion garment exports in FY24.
Crisil warned that the duty hike will erode India’s price competitiveness against regional peers. The agency projects the US share in India’s garment exports will shrink to 20–25 percent this year, down from 33 percent last year.
“If these tariffs persist, shipments to the US will decline substantially,” said a Crisil analyst.
The report, covering 120 rated garment manufacturers with combined revenues of Rs 45,000 crore, noted that profitability will come under pressure. Interest coverage is expected to weaken from 3.9 times in FY24 to 3.5–3.7 times this year, while leverage may rise from 2.78 to 3.0–3.1 times. Exporters heavily reliant on the US market are likely to face the steepest stress.
However, Crisil said resilient domestic demand—projected to grow 8–10 percent this year on the back of steady economic activity, lower interest rates, and tax concessions—will cushion the blow.
“This resilience will soften the impact of tariffs, though overall growth will remain slower than last year,” the agency added.
