Even before the US-tariffs kick in, Gujarat-based textile manufacturer Arvind Ltd is forced to re-prioritise orders, pay higher discounts and expensive air freight charges on export orders headed for the US market.
“What will be the reduction in overall demand in the United States (due to the tariffs). Nobody has an answer to it…. Retail sales have been decent and up to spring the order pipeline looks good. Now you have to see what happens in summer. That is where the uncertainty lies. What will happen to basic demand once consumers (in the US) start facing the impact of the tariffs that have been imposed. So far there has been no impact,” said Punil Lalbhai, vice-chairman of Arvind Ltd during an investors call held earlier this week.
According to Lalbhai, the tax breaks in the US and differential tariff between sourcing destinations like India, China, Bangladesh and Vietnam, will add to the complexity of the US tariffs. “Even if the overall demand shrinks, India will gain. This is a very complex scenario, about which we will know only when we are in it. Nobody can predict this,” he said, adding that about 25 percent of Arvind’s revenues comes from the US market.
During the first quarter of the current financial year, the company has already incurred ₹15 crore as additional cost due to the uncertainties surrounding the US tariffs. “The first quarter of FY 2026 was impacted due to (US) tariff-related cost absorption. These include higher discounts, shorter lead time orders leading to higher operating costs and use of air freight to meet urgent demand. Total tariff related cost across our businesses is around ₹15 crore in Q1 which significantly affected the margins,” said Satya Prakash Mishra, Head Investor Relations of the company.
The biggest component of this expenditure is air freight costs. “We have taken opportunistic orders in order to take advantage of the period when business is moving from one area to another. We have proactively decided that some products we will have to send by air to keep everybody satisfied,” said Lalbhai.
According to Equirus Express, the apparel market in the US is about $288 billion in size with China (21 per cent), Vietnam (19 per cent), and Bangladesh (9 per cent) as its top three sourcing countries. “India’s share remains comparatively modest (6 per cent), with final tariffs at 25 per cent the incremental growth rate for Indian players will be under pressure in near future,” it added.
Published on August 1, 2025
Leave a Reply