The Indian apparel export sector is bracing for immediate challenges despite initial relief over the newly announced reciprocal tariffs by the United States. Sudhir Sekhri, Chairman of the Apparel Export Promotion Council, in an interview with CNBC-TV18, highlighted that while the industry might gain some advantage over key competitors like Bangladesh and China due to the tariff structure, the immediate impact is a surge in demands for steep discounts and order cancellations from US buyers.

Sekhri stated that the industry initially felt a sense of relief knowing where they stand compared to their competitors. “First of all, now that the cat is out of the bag, there is a sense of relief in the sense that we at least know where we are heading and how we fare vis-à-vis our competition,” he said. He pointed out that India faces a 27% tariff levy, which is lower than the 37-47% tariffs imposed on Bangladesh and China.

However, this potential advantage is being quickly eroded by aggressive demands from US importers. According to Sekhri, buyers have already started asking for discounts ranging from 15% to 20%, which he termed “simply not workable” given the industry’s typical net profit margins of just 5% to 6%. He also revealed that order cancellations have already begun.

The Apparel Export Promotion Council is urging the government to step in and support the industry in dealing with this pressure. Sekhri drew a comparison with China’s response when it faced similar tariff pressures, where the government reportedly warned retailers against pushing manufacturers to reduce prices. “So, we have to take a stand, and we’d like the government to support us on this,” he emphasised.

While India might become more competitive against its immediate neighbours, Sekhri cautioned against a narrow perspective. He highlighted the risk of business moving to other countries with lower tariffs, such as Turkey, which faces only a 10% tariff, making the total tariff difference with India a significant 17%. This difference, according to Sekhri, “could more than offset Turkey’s higher production costs.” He also noted that NAFTA countries and Egypt, with lower tariff burdens, are likely to benefit.

Sekhri acknowledged the potential long-term upside of being better positioned than some major competitors. However, he questioned the immediate significance of this advantage in the face of the current challenges. “Yes, compared to Bangladesh, China, Cambodia, and Pakistan—our main competitors—we are better off. But is that really a significant advantage? That is the big question,” he concluded, highlighting the uncertainty surrounding the true impact of the new tariff regime on the Indian apparel export sector in the coming months.

Watch the accompanying video for the full interview.