As the US textile import market contracts, the sourcing landscape is undergoing sharp divergence. In H1 2026, India's textile and apparel exports to the US fell 23.3% year-on-year, losing $1.25 billion in orders, while ASEAN saw a 4.5% increase. This contrast is not coincidental but results from tariff uncertainty and supply chain inertia, with effects likely to persist for at least two to three quarters. For exporters reliant on a single market, these figures serve as a stark warning.
Order Flows Shift: India's Share Erodes
According to public data from China Customs and the US Department of Commerce, India's textile and apparel exports to the US dropped from $5.35 billion to $4.10 billion in H1 2026, a decline more than three times the overall US import contraction. During the same period, India's share of the US import market fell from 10.4% to 8.6%, losing 1.8 percentage points in just one year. This means that amid weak US demand, India not only failed to hold its ground but became the hardest-hit supplier.
In contrast, ASEAN's exports to the US grew by 4.5% in the same period, making it one of the few regions to achieve positive growth. As a result, US buyers are quietly shifting their sourcing allocations toward Southeast Asia, which is absorbing orders that previously went to India. This shift is not a temporary adjustment but a structural change based on long-term capacity and trade agreements, meaning lost orders may never return.
Tariff Uncertainty: A Fatal Variable in Pre-ordering
The textile industry is characterized by long lead times, with orders for spring/summer collections typically finalized in the fourth quarter of the previous year and the first quarter of the current year. This means tariff policy during the decision window directly influences supplier competitiveness. For H1 2026 orders, Indian suppliers were overshadowed by tariff policy volatility, prompting US brands and buyers to reduce their Indian sourcing ratios and shift to more stable ASEAN countries.
This risk-averse behavior is not impulsive but a rational choice based on supply chain predictability. Tariff fluctuations amplify the risk premium of Indian exports, putting them at a disadvantage. For buyers, a stable tariff environment is more attractive than short-term cost advantages, explaining why ASEAN could grow against the overall demand downturn.
Supply Chain Inertia: Slow Return of Orders
Trade order flows exhibit strong inertia. Once buyers finalize contracts, lock production schedules, and arrange logistics, the entire supply chain is fixed. Even if tariff pressures ease later, allocated orders are unlikely to return to India quickly. This inertia means the impact of order losses will last for several quarters, potentially evolving into a long-term share reshuffle.
From an industrial cluster perspective, capacity utilization in Indian textile hubs like Tiruppur and Surat has declined, while factories in Vietnam and Bangladesh are running fuller schedules. For global buyers, this means future sourcing will increasingly rely on ASEAN, and Indian suppliers must enhance their competitiveness to win back customers. Policy stability and supply chain reliability are becoming more critical than price alone.