Bengaluru | Mumbai: Relief will start trickling into India’s export hubs, where months of weak orders and job losses had followed the steep tariff hike by the US, the country's largest export market. Washington's move to cut tariffs on Indian goods is set to ease the pressure on labour-intensive exporters, such as textiles and gems and jewellery. This will potentially reverse job losses in manufacturing hubs such as Tiruppur and Surat after a year of muted orders forced factories to shed thousands of workers.
After prolonged negotiations between the two sides, US President Donald Trump and Prime Minister Narendra Modi on Monday announced a trade deal, under which Washington will cut tariffs on Indian goods to 18% from roughly 50%.
“About 7-10 million people are working in the textile industry. When the 50% tariffs were announced last year, US buyers continued sourcing from India but at steep discounts,” said Prabhu Damodaran, convenor at the Indian Texpreneurs Federation (ITF), Coimbatore.
In clusters such as Tiruppur, most units saw severe demand disruption, triggering turbulence and uncertainty at both company and workforce levels. With the EU and US trade deals now in place, every additional $1 billion in exports can generate nearly 1.5 lakh direct jobs, he said.
The Tiruppur cluster in Tamil Nadu, which employs around 800,000 workers and exported goods worth nearly ₹40,000 crore ($4.79 billion) in FY25, could now see order volumes surge as buyers return, according to Mitali Nikore, economist and founder of Nikore Associates.
Exporters are hopeful too and are set to work around the increased workflow. “Tiruppur is one of the largest exporters of textiles to the US, and about 30% of the exports happen to the US alone. With this ongoing trade and the increased requirement to supply more, production will increase, and we will need more manpower for this,” said Raja Shanmugam, a Tiruppur-based exporter of garments and textiles to the US and other major markets.
Last year’s amped up tariffs had hurt margins and jobs among small and medium exporters the most, and they now stand to gain the most from the eased tariffs.
“We need to understand the impact this tariff has created in India’s textile and garmenting industry over the last eight-nine months,” P Senthilkumar, senior partner at consulting firm Vector Consulting Group, told Mint. “Big corporates who have the muscle power to sail through this crisis have given discounts of 10-20% to their US customers just to retain orders and keep the shopfloor running. If you're not a vertical setup, if you're buying fabric from an outside mill and are just a standalone player like the people who are in Tiruppur, then you do not have that kind of margin luxury. This is a very cutthroat, tight-margin industry.”
These smaller units have shut shop in the past few months, letting go of thousands of workers.
Relief, for now
Even as the industry cheers the drop in tariffs from 50% to 18%, specifics of the agreement remain unclear. Under the new structure, India should regain its competitive edge over rival textile and apparel exporters, including Bangladesh and Vietnam.
The reconciliation comes after months of strained ties that sharply hit exports from India to the US across key job-creating sectors, including textiles, seafood and jewellery. The tariff shock also pushed New Delhi to accelerate trade diversification. Last week, India and the EU announced a pact to eliminate tariffs on 80–90% of goods, marking India’s ninth free trade agreement in four years.
Although last year’s trade disruptions hurt volumes, Shanmugam said the employment impact was limited due to Tiruppur’s strong labour absorption capacity. “For instance, if someone lost a job in my factory, the neighbouring company would have offered him a job immediately because there are many factories in Tirupur where the US is not their biggest market, Europe and other countries are,” he said.
Hiring in export-oriented manufacturing is now expected to recover gradually. The textiles sector could see a noticeable increase in recruitment over the next 12–18 months, particularly in clusters across Tamil Nadu, Gujarat and Maharashtra, said Vijay Vasanth, senior vice president at GI Group Holding, a HR services firm.
“As order books stabilize before expanding further, initial demand is likely to be concentrated on shop-floor positions, quality control, merchandising and supply-chain activities,” Vasanth said.
Besides, he said, employers in gems and jewellery hubs will be looking to upskill workers while jobs in key processes in this industry–including advanced cutting and polishing, gem grading, and quality assurance–continue to lag.
“In key clusters such as Surat, Mumbai, and Jaipur, there is a growing investment in readiness and training of the workforce to be ready for the demand in the long term, although flexible hiring will remain important for dealing with unpredictability,” he said, adding that employers will likely remain cautious in the near term, even as medium-term hiring prospects turn more optimistic.
Devina Sengupta contributed to the story.