RANCHI, Nov 11 — At Orient Craft’s factory in Ranchi, hundreds of women stitch dresses, shirts and children's clothing for United Kingdom (UK) retailers Next and Marks and Spencer.
Not long ago, most of Orient Craft's output went to the United States (US). But founder Sudhir Dhingra, 77, has cut shipments there since the US hiked tariffs to as much as 50 per cent last year, hitting orders from customers including American Eagle and Gap.
Even with duties now lower and the possibility of a trade pact, he has decided it is too risky to depend so heavily on one market.
"Even if there is a deal, what is the guarantee that it will hold water? I do not wish to see that sword on my head," Dhingra said.
Orient Craft is one of many Indian companies reconfiguring their export destinations and their exposure to the US, in light of the tariff shock, in a move that is likely to strengthen New Delhi's hand in its trade negotiations with Washington and potentially reduce India's vulnerability to US pressure over time.
He added that American buyers cancelled orders or sought discounts after US President Donald Trump first announced the tariff hikes in April 2025, with some asking suppliers to absorb 25 per cent of the duty, despite manufacturers' margins being less than 10 per cent.
Orient Craft has since moved sales to the UK, Europe, and, to a lesser extent, India. The US now accounts for less than 10 per cent of sales, down from 84 per cent before the tariffs, with annual exports of about ₹1.5 billion (RM65.25 million).
US duties on Indian products are currently 10 per cent under Section 301, a US law allowing tariffs on imports, plus base tariffs ranging from six per cent to 12 per cent.
Gokaldas Exports, which employs more than 53,000 people and is one of India's biggest garment exporters, is turning to Europe.
"It is not a temporary shift," said its managing director Sivaramkrishnan Ganapathi.
The company aims to raise Europe's revenue share to 25 per cent to 30 per cent over the next three to five years, from 15 per cent to 16 per cent, reducing the US share to 35 per cent to 40 per cent from 50 per cent to 55 per cent.
The Global Trade Research Institute has estimated that from April to August, India's textile, apparel and home-furnishings exports to the US fell 9.8 per cent to US$4.0 billion (RM16.29 billion), while shipments to other markets rose 3.7 per cent to US$15.2 billion (RM61.92 billion).
According to industry estimates, the US share of Indian exports fell to 25.4 per cent at the end of August from 28.3 per cent in 2022.
Building new markets, lowering costs
Exporters said US tariff uncertainty, higher shipping costs, and US buyers' discount demands have squeezed margins, making other markets, including the United Arab Emirates, the UK, and the European Union (EU), look more attractive.
Indian clothing also gets duty-free access to the UK under the India-UK trade deal that came into effect in July, while a similar EU agreement could eliminate duties of 12 per cent to 17 per cent.
"Germany, France, Italy, and the Netherlands are key targets," said industry group Apparel Export Promotion Council's chairman A. Sakthivel.
Exporters are also looking to lower manufacturing costs.
Ranchi, in the eastern state of Jharkhand, is best known for coal and iron ore, but now lures garment factories with subsidies, easier land access, and an educated, reliable workforce.
Reuters visited three factories in and around Ranchi, together employing about 8,000 people.
“We have at least a 10 per cent efficiency advantage here over other locations,” said Gokaldas' operations senior vice president Mrityunjay Singh, whose company has two factories in Ranchi, with plans to open a third, creating up to 4,600 jobs.
"We cannot rely on a single market, product or buyer," said Ranchi-based Auburn Design's Birendra Rawat, whose company makes Jockey underwear and clothing for local licensee Page Industries, and produces five to six million garments a month to be sold in India and neighbouring countries.
India's own apparel market, valued at US$150 billion (RM611 billion) and growing seven to eight per cent annually, provides a buffer against export uncertainty through steadier cash flows and demand.
"Diversification is becoming a structural strategy, especially for exporters heavily exposed to the US market," said the Confederation of Indian Textile Industry's secretary-general Chandrima Chatterjee.
Exporters said they will not abandon the US completely given the size of the market and longstanding relationships with buyers, but the tariff shock makes it unlikely to regain its former dominance, even if duties eased.
"The US market remains important, but it cannot decide the future of thousands of families who depend on us," Dhingra said.
