US 12.5% forced-labour tariff threatens 8-10% margin hit for Indian RMG exporters to Walmart, Target, Gap
Section 301 tariff freezes sourcing upgrade plans across Tirupur, Coimbatore and Surat clusters. Synthetic segment most exposed via Chinese inputs ($3.8B FY26); cotton traceability lags with only 25-30% of consignments certified. US accounts for 25-26% of India's $15.8B FY26 apparel exports.
What happened
US 12.5% Section 301 forced-labour tariff threatens Indian RMG exporters' margins by 8-10%, freezing Walmart/Target/Gap sourcing upgrade plans. Synthetic
Key facts
- 12.5% tariff
- 8-10% margin erosion
- 5-8% margins
- $15.8 billion FY26 apparel exports
- 25-26% US share
- $4.8 billion RM exports to US FY26
- $3.8 billion China imports FY26
- 25-30% certified consignments
Why this matters
Scout distressed Tirupur and Coimbatore mid-tier exporters as tariff-driven margin pressure may force consolidation, with traceability-certified players commanding premium multiples in any roll-up.