India's textile industry, the country's second-largest employer supporting more than 45 million jobs, is facing significant challenges due to the Iran war and recent U.S. tariffs [1]. The conflict, which began on February 28 after the U.S. and Israel struck Iran, has disrupted the movement of goods through the Strait of Hormuz, leading to increased energy and freight costs and straining supply chains [1]. This has driven up raw material and packaging costs for Indian textile manufacturers, further impacting their competitiveness in global markets [1].
Previously, in August of the prior year, the U.S. imposed a 50% tariff on Indian goods, severely affecting ready-made garment companies by causing lost orders and forcing discounts to retain customers [1]. Although these tariffs were reduced in February, the relief was short-lived as the onset of the Iran war plunged the industry into fresh turmoil [1]. Between April 2025 and February 2026, India exported cotton and man-made yarns, fabrics, and ready-made garments worth $29.5 billion, a slight decrease from $29.8 billion in the previous year, according to the Indian commerce ministry [1]. While the decline appears modest, industry leaders are concerned about the negative trend, especially as India aims to reach $100 billion in textile exports annually by 2030 [1].
The war's impact has also led to unusual challenges, such as migrant workers struggling to secure liquified petroleum gas, prompting some to return to their hometowns [1]. Industry leaders, including Ashwin Chandran, chairman of the Confederation of Indian Textile Industry, and Madhu Sudhan Bhageria, have expressed concerns about the industry's prospects, noting that expectations for a better financial year ending March 2027 have been dampened by the ongoing conflict [1].
A continued spike in global oil prices, driven by the war, could further dampen consumer demand in the U.S., potentially leading to additional production cuts in India's textile sector [1].
CONCLUSION
India's textile industry faces mounting pressures from both the Iran war and U.S. tariffs, resulting in higher costs, supply chain disruptions, and declining exports. Industry leaders are pessimistic about near-term recovery, with the sector's $100 billion export goal for 2030 now appearing increasingly challenging. The market outlook remains negative, with further risks tied to global oil prices and U.S. consumer demand.