(Reuters)
RANCHI, India, Nov 11 – At Orient Craft’s factory in Ranchi, hundreds of women stitch dresses, shirts and children’s clothing for British retailers Next (NXT.L), opens new tab and Marks & Spencer (MKS.L), opens new tab.
Not long ago, most of Orient Craft’s output would have gone to the US. But founder Sudhir Dhingra, 77, has cut shipments there since the US hiked tariffs, which rose to as much as 50% last year, hitting orders from customers including American Eagle (AEO.N), opens new tab and Gap (GAP.N), opens new tab.
Even with duties now lower and the possibility of a trade pact, Dhingra has decided it is too much of a risk to depend so heavily on one market.
“Even if there is a deal, what is the guarantee that it will hold water?” he said. “I don’t wish to see that sword on my head.”
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.
Dhingra said US 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% of the duty, despite manufacturers’ margins being less than 10%.
Orient Craft has since moved sales to Britain, Europe and, to a lesser extent, India. The US now accounts for less than 10% of sales, down from 84% before the tariffs, with annual exports of about 1.5 billion rupees ($15.82 million).
US duties on Indian products are currently 10% under Section 301, a US law allowing tariffs on imports, as well as base tariffs from 6% to 12%.
Gokaldas Exports (GOKL.NS), opens new tab, 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 Managing Director Sivaramkrishnan Ganapathi.
The company aims to raise Europe’s revenue share to 25% to 30% over the next 3 to 5 years, he said, from 15% to 16%, reducing the US share to 35% to 40% from 50% to 55%.
In April to August, India’s textile, apparel and home-furnishings exports to the US fell 9.8% to $4.0 billion, while shipments to other markets rose 3.7% to $15.2 billion, according to the Global Trade Research Institute.
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