Overview

• The 50% US tariff on Indian readymade garment imports takes effect on August 27, up from 25% previously.
• CRISIL now projects India’s garment industry revenue growth at 3–5% in FY26, down from 8–10% last year.
• Exporters with over 40% US exposure face the sharpest strain, with profitability seen contracting 300–500 basis points and industry margins shrinking 50–150 basis points as interest coverage slips to 3.5–3.7 times and leverage rises to about 3.0–3.1 times.
• CRISIL expects the US share of India’s garment exports to fall from roughly one‑third to 20–25% in FY26 as American retailers realign sourcing.
• Firms are preparing to pivot shipments to the EU, UK and UAE, with the UK FTA expected to lift UK volumes by year‑end, while domestic sales are forecast to grow 8–10% and partly offset export losses.