In the first half of 2026, India's textile and apparel exports to the United States suffered a severe setback, plunging 23.3% year-on-year to $4.10 billion from $5.35 billion, a direct loss of $1.25 billion in orders. Meanwhile, the overall US import market contracted, but India's decline was more than three times the average drop, with its market share shrinking from 10.4% to 8.6%. This contrast suggests that India is not merely a victim of weak demand but is being actively marginalized by buyers.
Structural Signals Behind the Data
India's sharp export decline is not an isolated event. During the same period, ASEAN's textile and apparel exports to the US grew by 4.5% against the shrinking market. This shift clearly indicates a global redistribution of textile supply chains. For buyers, this is not just about order transfers but a concentrated reassessment of sourcing risks.
Tariff uncertainty is the core trigger. The textile industry has a strong pre-ordering cycle: spring/summer orders shipped in the first half are typically locked in late the previous year or early that year. This means that during the order allocation window for H1 2026, Indian suppliers faced unresolved tariff risks, directly influencing US brands and buyers to shift order shares to ASEAN countries with more stable policy environments.
On a deeper level, India's exposure reveals not just policy volatility but a weakness in supply chain predictability. US buyers weigh cost, policy stability, and delivery reliability. When tariffs fluctuate repeatedly, buyers seeking to avoid cost risks naturally turn to more stable alternative sources, even if it means adjusting existing supply chains.
The Inertia of Order Transfers
A key feature of trade chains is strong inertia in order flows. Once buyers finalize contracts, lock production schedules, and arrange shipping, the entire supply chain is fixed. Even if tariff risks ease later, allocated orders are unlikely to return to India quickly. This means India may lose not only H1 2026 orders but also affect exports for several quarters ahead.
For ASEAN countries, this is both an opportunity and a challenge. Taking over transferred orders requires capacity expansion and infrastructure investment, but they must also guard against over-reliance on the US market. For global textile traders, India's case offers a vital lesson: over-dependence on a single market can lead to severe shocks from policy swings. Diversification and supply chain resilience are the long-term defenses against external uncertainties.