Smaller Orders, Big Textile Shift

US Demand Reset Is Forcing Changes In India’s Textile Industry

By Pritha Pahari

A few years ago, exporters like Shalini Jain could insist on minimum orders of 3,000 pieces and still maintain a full order book. Today, buyers are asking for trial batches as small as 200 pieces, and refusing often means losing the order entirely.

This shift reflects a broader change in US demand, where buyers now prioritise flexibility, smaller quantities and faster turnaround times. For exporters like Jain, this is not a temporary disruption but a structural shift, as large fast-fashion orders increasingly move to countries like Vietnam and Bangladesh.

What?

Across India’s textile industry, exporters are being forced to adapt to this new reality. India’s exports to the US fell sharply down 28.7% year-on-year in February while competitors like Vietnam have managed to grow.

Although tariffs between India and Bangladesh are now relatively similar, the earlier spike in US duties, which briefly touched 50% for India, caused lasting damage. Export losses were estimated at $2.5–3 billion, with key textile hubs such as Tiruppur, Surat and Ludhiana particularly affected.

In response, exporters are changing how they operate. Many are lowering minimum order quantities, preparing fabric in advance, and using digital tools to speed up design approvals. Some are outsourcing work to smaller units to meet tighter deadlines.

There is also a shift in hiring, with businesses bringing in specialists who understand fast-fashion cycles rather than just production processes. These adjustments are helping exporters stay competitive, but they are also putting pressure on margins.

Why?

This is also because several structural challenges still remain unresolved, with logistics delays, long turnaround times and, most importantly, rising freight costs continuing to weigh heavily on exporters. Even as tariff pressures ease, higher shipping charges have erased much of the benefit, leaving exporters struggling to maintain profitability.

Mihir Parekh, Associate Partner at Foundation for Economic Development notes, “The shift away from India and towards Vietnam and Bangladesh started a decade before 2025 and has to do with structural factors rather than tariffs.”

Over time, the industry is splitting into two distinct segments. Large-scale exporters are facing intense price competition and pressure to deliver faster, while smaller niche players, such as those in hand embroidery and haute couture, operate in a different space with less direct competition from countries like Vietnam and Bangladesh. Although this segment retains a global edge due to craftsmanship, it is not immune to softer demand and rising costs.

What’s next?

Looking ahead, some industry leaders remain cautiously optimistic, especially with global shifts toward sustainable and fast fashion. However, for most exporters, survival will depend not only on internal adaptation but also on external support.

There is a growing call for government intervention on freight costs through regulation, subsidies or international agreements. Without this, Indian exporters risk continuing to operate at a disadvantage, even as they adjust to a rapidly changing global market.

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256 GW

That's how much power India consumed at peak on Saturday, a fresh record, surpassing Friday's high of 252 gigawatts and exceeding the previous 2024 peak of 249 gigawatts. Blistering heat waves drove the surge, with maximum demand recorded during daytime hours as residents cranked up air conditioners across the country. Temperatures touched 46.9°C on Sunday, with 16 cities recording highs above 45°C.

Overview: While rapid solar and coal capacity additions have helped manage daytime surges, evening hours remain a pressure point. Evening peak deficits of 4 gigawatts on Friday and 3.5 gigawatts on Saturday signal a growing night-time supply crunch, compounded by war-driven gas supply disruptions.

Setting: In response, India is doubling down on coal, accelerating energy storage deployment, and promoting hydropower and nuclear as base load alternatives. The power ministry has already braced for demand potentially reaching 283 gigawatts this season, Bloomberg reported.

Sun’s Mega Buy

India’s largest pharma company, Sun Pharmaceutical Industries, will acquire US-based Organon & Co. for $11.75 billion in an all-cash deal, paying $14 per share to take full ownership. The companies said the transaction will “leverage complementary portfolios and global scale” to drive long-term growth.

Why This Matters: This is among the largest overseas acquisitions by an Indian pharmaceutical company, signalling a renewed push to scale globally. It also comes as Sun Pharmaceutical Industries steps up its shift toward higher-margin speciality medicines, as pressure on its US business, including pricing erosion and broader trade frictions, weighs on growth.

How We Got Here: Managing Director and CEO Kirti Ganorkar called it a “logical next step in strengthening” Sun’s global business. The deal brings Organon’s portfolio across women’s health, biosimilars and established medicines, with a presence in over 140 markets, including China and Brazil.

Pivot: Sun expects the acquisition to boost earnings and expand its global footprint. But it will also take on roughly $8.6 billion in debt and integrate a large, diverse portfolio, adding execution risk.

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The Lead: The economic toll is globally widening. Strait of Hormuz shipping remains muted, triggering a second fertiliser price surge in four years and threatening global food production, Reuters reported.

In India, the government said it has so far shielded farmers from price volatility, with fertiliser supplies exceeding requirements, while all Indian seafarers in the region remain safe.

The Shift: Security officials, meanwhile, are reassessing protective arrangements after a gunman opened fire near the White House Correspondents' dinner in Washington. The shooter was stopped before reaching the venue, but attendees heard shots fired, underscoring persistent vulnerabilities around the president's security, Reuters reported.

India-NZ Trade Push

India and New Zealand signed a free trade agreement on Monday, cutting tariffs on products such as kiwifruit and apples, expanding export access, and easing mobility for professionals. New Zealand Prime Minister Christopher Luxon said, “The benefits of this FTA are widespread,” highlighting improved access to India’s market. Commerce Minister Piyush Goyal said New Zealand firms could invest up to $20 billion in India.

Fast Facts: The pact will eliminate duties on all Indian exports to New Zealand, while India will cut or remove tariffs on about 95% of New Zealand’s exports. Sensitive sectors, including dairy, remain protected. The deal also introduces visa quotas, including 5,000 places for Indian professionals and working holiday access. 

Backdrop: This agreement is part of India’s broader strategy to diversify its trade partnerships. It follows the EFTA deal (which entered into force in October 2025) and comes as India finalises implementation of recently signed agreements with the UK and Oman, while the EU trade deal moves through the ratification process.

PV Volumes To Soften

India's passenger vehicle (PV) industry will likely moderate after two years of strong growth. ICRA projects wholesale volume growth of 4-6% in FY2027, down from 8.6% in FY2026, citing an elevated base, weak monsoon outlook, and uncertainty from the ongoing West Asia crisis. GST rate cuts and new model launches are expected to provide a partial cushion.

Context: FY2026 closed on a high note, with wholesale volumes hitting an all-time high of 4.7 million units and retail volumes touching 4.6 million units. March 2026 saw particularly strong momentum, with wholesale and retail volumes rising 16% and 21% year-on-year, respectively. Inventory levels also eased sharply to 28 days from 52-53 days a year ago.

Setup: On the exports front, volumes grew 18% in FY2026, led by Maruti Suzuki and followed by Hyundai.

How Electricity Markets are Responding to Record Demand

On Episode 858 of The Core Report, financial journalist Govindraj Ethiraj talks to Victor Vanya, Director and Co-Founder at EMA Solutions, as well as Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI).

• Markets take solace from potential back-channel developments in Iran-US negotiations

• Why India’s agriculture sector may not be much affected by a deficient monsoon

• How electricity markets are responding to record demand

• With more FTAs under the belt, this time NZ, what does it mean for India’s trade environment?

• Why Adidas shares are rising

• And how the world’s largest aviation industry is running out of mechanics to service its aircraft