Crisil ratings says India readymade garment industry falls half as US tariff kicks in
By Anjali Sharma
WASHINGTON – Crisil Ratings said on Tuesday that the revenue of India’s readymade garment industry is likely to fall to 3-5% in the financial year 2026 (FY26), half the pace of last year as the US 50% tariff kicks in.
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 per cent 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.
US is India’s single-largest garment market, accounted for one-third of the USD 16 billion worth of exports logged in FY24, the report said.
Manish Gupta, deputy chief rating officer at Crisil Ratings said “If these tariffs persist, shipments to the US will decline substantially”.
The agency expected the US share in India’s garment exports to fall to 20-25% this year from 33% 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.
It noted the companies generating over 40% of their revenues from the US are expected to face the steepest challenges.
Crisil expected that despite the slowdown in exports, domestic demand is set to remain resilient, growing by 8 to 10% this year.
The growth will be supported by a steady economy, lower interest rates, and tax concessions, it added.
Gautam Shahi, director at Crisil Ratings said “This resilience will soften the blow from tariffs, though overall growth will be slower than last year.”
