Tariffs and Iran war threaten India's $100 billion garments target

Rising U.S. tariffs alongside the conflict centred on Iran are placing new pressure on India’s textile and garments sector, jeopardising the country’s stated ambition of $100 billion in exports by 2030. The tariff measures announced in mid‑2025 have materially increased the effective duty on a range of Indian goods bound for the U.S., the sector’s largest market, undermining competitiveness for many exporters.

Industry bodies report a sudden pickup in order cancellations and delays as buyers reassess sourcing costs and delivery timelines; ready‑made garment shipments, which form a substantial portion of India’s textile exports, are particularly exposed. New Delhi and trade councils had set an export roadmap to lift textile and apparel shipments toward the $100bn target, but the current shock complicates that trajectory.

At the same time, the Iran‑centred war has disrupted key maritime routes, sharply increasing freight rates and war‑risk insurance premiums. Carriers rerouting around Africa and the need for additional conflict surcharges have extended transit times and raised landed costs for exporters, squeezing margins and creating logistical uncertainty for time‑sensitive garments.

The market impact is proving broad: trade bodies warn that prolonged disruptions could put several billion dollars of monthly exports at risk, forcing firms to shift volumes to alternative destinations or relocate parts of production to lower‑tariff jurisdictions. Those shifts would be costly and time‑consuming, with potential job and revenue implications across textile clusters.

In the wider economic and policy context, Indian authorities are likely to double down on diversification—pursuing new markets, bilateral trade arrangements and export incentive schemes—while exporters accelerate value‑added moves to protect margins. Analysts caution, however, that absent rapid de‑escalation or tariff rollback, the $100bn objective will require stronger policy support and structural change within the industry.