India’s garment revenue may fall by half: report

Revenue of India's readymade garment industry is likely to fall to just 3-5 percent in the financial year 2026 (FY26), almost half the pace of last year, Crisil Ratings said.

The readymade garment industry is one of the country's biggest job creators and exporters. It is bracing for a sharp slowdown this year after Washington announced a 50 percent tariff on Indian garment imports starting August 27, 2025.

Crisil noted that the duty hike will weaken India's price competitiveness against its Asian peers.

Notably, the US is India's single-largest garment market, accounting for around one-third of the USD 16 billion worth of exports logged in FY24.

"If these tariffs persist, shipments to the US will decline substantially," said Manish Gupta, deputy chief rating officer at Crisil Ratings. The agency expects the US share in India's garment exports to fall to 20-25 percent this year from 33 percent last year.

The analysis by Crisil covers over 120 rated manufacturers with combined revenues of around Rs 45,000 crore and shows that profitability will come under pressure.

Interest coverage is projected to weaken from 3.9 times in FY24 to 3.5-3.7 times in the current year, while leverage ratios may rise from 2.78 to 3.0-3.1 times. Companies generating more than 40 percent of their revenues from the US are expected to face the steepest challenges.

Crisil expects that despite the slowdown in exports, domestic demand is set to remain resilient, growing by 8 to 10 percent this year. The growth will be supported by a steady economy, lower interest rates, and tax concessions, it added.

"This resilience will soften the blow from tariffs, though overall growth will be slower than last year," said Gautam Shahi, director at Crisil Ratings.