Faced with soaring U.S. import duties on Chinese, Bangladeshi and Vietnamese apparel, retail giant Walmart has ramped up sourcing from India. Yet as Walmart’s buying teams flood India’s garment hubs with inquiries, manufacturers warn that an acute shortage of skilled labor could blunt India’s tariff advantage before it can translate into sustained export growth.
Last month, U.S. President Donald Trump announced a 145 percent duty on Chinese textiles, alongside 37 percent on Bangladesh and 46 percent on Vietnam. India, by contrast, will see a comparatively modest 26 percent levy beginning in July. This tariff differential has prompted Walmart to double its container shipments of clothing and home textiles from India over the past year, according to industry estimates. Yet for the Tiruppur knitwear cluster in Tamil Nadu—the “Manchester of South Asia” that accounts for nearly one-third of India’s $16 billion apparel exports—the surge in orders has laid bare a stark reality: there simply aren’t enough workers to stitch garments at the scale Walmart demands.
“Every buyer from Walmart and Costco that calls is told the same thing: we don’t have the people,” said R.K. Sivasubramaniam, managing director of Raft Garments in Tiruppur. His factory, which produces millions of t-shirts and undergarments for U.S. clients at as little as \$1 apiece, now has sprawling rows of idle sewing machines. “Our challenge isn’t machines or materials. It’s labor. We need at least 100,000 more hands just to meet the new inquiries.”
The Lure of India’s Tariff Window*
For U.S. retailers, the tariff calculus is straightforward. Even with a 26 percent duty, apparel from India will be cheaper than Chinese imports at 145 percent and only slightly more costly than Bangladeshi goods taxed at 37 percent. At the same time, India’s broader array of fabrics, dyes and accessories offers supply-chain advantages over some smaller producers. Walmart’s import data show that India’s share of its U.S. apparel and home-goods shipments climbed from under 10 percent in early 2023 to nearly 25 percent in the first quarter of this year.
“I can’t recall a shift like this in my 20 years in sourcing,” said an American retail executive who declined to be named. “Merchants are being told: ‘If you need volume, you’re going to India.’ It’s that simple.”
Yet the enthusiasm hits a snag when buyers ask for lead times and floor plans. India’s apparel sector—dominated by small and medium enterprises—struggles to recruit and retain workers. Manufacturers say women migrants, who form the backbone of garment stitching, often leave in a few months, drawn away by local factories that pay slightly more or permit longer hours. In Tiruppur alone, where more than one million workers are employed across some 2,500 units, factories estimate a shortfall of 20 percent to 30 percent of the workforce at any given time.
“Here, a job that pays \$180 a month and insists on strict overtime rules is no match for informal units offering \$200 for longer hours,” explained Kumar Duraiswamy of the Tiruppur Exporters’ Association. “We’re losing trained staff almost as fast as we skill them.”
Government Steps In, but Gaps Remain
Recognizing the crunch, New Delhi has poured resources into skilling initiatives. Under the “Make in India” banner, the government pledged last year to train 300,000 textile and apparel workers in specialized courses—from cutting and stitching to industrial sewing machine operation. State governments in Tamil Nadu and Gujarat have rolled out incentive packages, including subsidized housing and transport for factory workers, and mandated factory-level crèches to attract married women.
Still, training centers operate at only a fraction of required capacity. Manufacturers like Naveen Michael John of Cotton Blossom Fabrics have taken matters into their own hands, setting up three remote training camps in Uttar Pradesh and Bihar. “We teach young women stitching skills for three months, bring them here for seven, then they go home,” he said. “It’s better than nothing, but we lose half of them when the course ends.”
To mitigate the labor shortfall, some exporters are investing in automation. Raft Garments recently imported high-end sewing robots that can handle repetitive stitching tasks, cutting reliance on hand-sewers by about 15 percent. Yet the upfront cost of machinery—often exceeding \$200,000 per unit—is prohibitive for the vast majority of small factories. And automation can only replace certain operations; complex stitching and quality checks still demand human dexterity.
The Bangladesh Benchmark
Bangladesh remains a potent competitor, with average labor costs around \$139 a month and factories employing up to 1,200 workers under a single roof—providing economies of scale unmatched in India, where even the largest units top out at about 800 staff. Buyers routinely reference Bangladeshi pricing as the floor, demanding that Indian suppliers match or come within a few cents per garment. At Balu Exports, which ships sportswear to Walmart, “clients told us flatly: ‘We won’t move orders unless you match Bangladesh,’ ” said partner Mahesh Kumar Jegadeesan.
India’s structural disadvantages extend beyond wages. Regulatory compliance, stricter overtime caps and social-audit requirements for foreign buyers push effective labor costs 10 percent to 15 percent higher than in competing markets. High raw-material prices—cotton yarn, dyed fabric and packaging—further compress margins.
Walmart’s pivot to India is part of a broader diversification away from China. Over the past five years, the retailer has slashed China’s share of its U.S. imports from 80 percent to under 60 percent, boosting shipments from India, Vietnam and other Asian suppliers. India’s rising share—from 2 percent in 2018 to 10 percent today—reflects Walmart’s calculus that tariff differentials and geopolitical risk justify supplier re-allocation, even if costs are slightly higher.
Yet Indian manufacturers caution that the window of opportunity may be narrow. July’s tariff imposition comes only after a two-month pause, and several U.S. buyers expect that duties could be recalibrated later this year. “Companies know this is a moving target,” said an industry consultant in Mumbai. “They’re placing sample orders now, but large scale shifts will depend on how stable the tariff regime looks after the U.S. elections.”
At Raft Garments, lines of sewers in pastel uniforms work silently under bright fluorescents. Managers hover over quality-control stations, sorting defective shirts by the dozens. “We’ve had 14 new buyer inquiries in recent weeks,” Sivasubramaniam said, watching a shipment of 3 million t-shirts pile up in cartons. “One order like that would be more than enough for us—if only we could put people to the machines.”
Nearby, 24-year-old seamstress Kavita Devi leans forward, eyes fixed on her needle. “I came for the \$180 monthly wage,” she said. “But two months in, I want to return home. They say there’s safety and better pay at the unorganized units near my village.”
Industry’s Push for Policy Tweaks
Garment associations are now lobbying New Delhi to ease some factory regulations and increase performance-based incentives. Proposals include allowing limited overtime, tax rebates on capital machinery, and streamlined labor-migration protocols. “If the government truly wants to position India as an alternative sourcing hub, it needs to remove these bottlenecks,” argued Mithileshwar Thakur of the Apparel Export Promotion Council.
For Walmart, India presents an attractive tariff edge; for India, the retailer represents a pathway to diversify its export markets beyond the West and deepen manufacturing ties with global supply chains. But unless India can reconcile its high operating costs and persistent worker scarcity, the benefits of a lower tariff may evaporate in the face of empty factory floors and missed delivery deadlines.
As global apparel supply chains realign under pressure from U.S. tariff policy, India’s garment industry finds itself at a crossroads. Factories are eager to capture the orders that once flowed to Bangladesh and Vietnam, yet struggle to find the workforce that made those markets competitive. The success of India’s tariff-driven window will hinge not only on policy tweaks and training drives, but on the industry’s ability to stem the tide of labor flight and deliver price-competitive, quality garments—before that window closes.
(Source:www.marketscreener.com)
Last month, U.S. President Donald Trump announced a 145 percent duty on Chinese textiles, alongside 37 percent on Bangladesh and 46 percent on Vietnam. India, by contrast, will see a comparatively modest 26 percent levy beginning in July. This tariff differential has prompted Walmart to double its container shipments of clothing and home textiles from India over the past year, according to industry estimates. Yet for the Tiruppur knitwear cluster in Tamil Nadu—the “Manchester of South Asia” that accounts for nearly one-third of India’s $16 billion apparel exports—the surge in orders has laid bare a stark reality: there simply aren’t enough workers to stitch garments at the scale Walmart demands.
“Every buyer from Walmart and Costco that calls is told the same thing: we don’t have the people,” said R.K. Sivasubramaniam, managing director of Raft Garments in Tiruppur. His factory, which produces millions of t-shirts and undergarments for U.S. clients at as little as \$1 apiece, now has sprawling rows of idle sewing machines. “Our challenge isn’t machines or materials. It’s labor. We need at least 100,000 more hands just to meet the new inquiries.”
The Lure of India’s Tariff Window*
For U.S. retailers, the tariff calculus is straightforward. Even with a 26 percent duty, apparel from India will be cheaper than Chinese imports at 145 percent and only slightly more costly than Bangladeshi goods taxed at 37 percent. At the same time, India’s broader array of fabrics, dyes and accessories offers supply-chain advantages over some smaller producers. Walmart’s import data show that India’s share of its U.S. apparel and home-goods shipments climbed from under 10 percent in early 2023 to nearly 25 percent in the first quarter of this year.
“I can’t recall a shift like this in my 20 years in sourcing,” said an American retail executive who declined to be named. “Merchants are being told: ‘If you need volume, you’re going to India.’ It’s that simple.”
Yet the enthusiasm hits a snag when buyers ask for lead times and floor plans. India’s apparel sector—dominated by small and medium enterprises—struggles to recruit and retain workers. Manufacturers say women migrants, who form the backbone of garment stitching, often leave in a few months, drawn away by local factories that pay slightly more or permit longer hours. In Tiruppur alone, where more than one million workers are employed across some 2,500 units, factories estimate a shortfall of 20 percent to 30 percent of the workforce at any given time.
“Here, a job that pays \$180 a month and insists on strict overtime rules is no match for informal units offering \$200 for longer hours,” explained Kumar Duraiswamy of the Tiruppur Exporters’ Association. “We’re losing trained staff almost as fast as we skill them.”
Government Steps In, but Gaps Remain
Recognizing the crunch, New Delhi has poured resources into skilling initiatives. Under the “Make in India” banner, the government pledged last year to train 300,000 textile and apparel workers in specialized courses—from cutting and stitching to industrial sewing machine operation. State governments in Tamil Nadu and Gujarat have rolled out incentive packages, including subsidized housing and transport for factory workers, and mandated factory-level crèches to attract married women.
Still, training centers operate at only a fraction of required capacity. Manufacturers like Naveen Michael John of Cotton Blossom Fabrics have taken matters into their own hands, setting up three remote training camps in Uttar Pradesh and Bihar. “We teach young women stitching skills for three months, bring them here for seven, then they go home,” he said. “It’s better than nothing, but we lose half of them when the course ends.”
To mitigate the labor shortfall, some exporters are investing in automation. Raft Garments recently imported high-end sewing robots that can handle repetitive stitching tasks, cutting reliance on hand-sewers by about 15 percent. Yet the upfront cost of machinery—often exceeding \$200,000 per unit—is prohibitive for the vast majority of small factories. And automation can only replace certain operations; complex stitching and quality checks still demand human dexterity.
The Bangladesh Benchmark
Bangladesh remains a potent competitor, with average labor costs around \$139 a month and factories employing up to 1,200 workers under a single roof—providing economies of scale unmatched in India, where even the largest units top out at about 800 staff. Buyers routinely reference Bangladeshi pricing as the floor, demanding that Indian suppliers match or come within a few cents per garment. At Balu Exports, which ships sportswear to Walmart, “clients told us flatly: ‘We won’t move orders unless you match Bangladesh,’ ” said partner Mahesh Kumar Jegadeesan.
India’s structural disadvantages extend beyond wages. Regulatory compliance, stricter overtime caps and social-audit requirements for foreign buyers push effective labor costs 10 percent to 15 percent higher than in competing markets. High raw-material prices—cotton yarn, dyed fabric and packaging—further compress margins.
Walmart’s pivot to India is part of a broader diversification away from China. Over the past five years, the retailer has slashed China’s share of its U.S. imports from 80 percent to under 60 percent, boosting shipments from India, Vietnam and other Asian suppliers. India’s rising share—from 2 percent in 2018 to 10 percent today—reflects Walmart’s calculus that tariff differentials and geopolitical risk justify supplier re-allocation, even if costs are slightly higher.
Yet Indian manufacturers caution that the window of opportunity may be narrow. July’s tariff imposition comes only after a two-month pause, and several U.S. buyers expect that duties could be recalibrated later this year. “Companies know this is a moving target,” said an industry consultant in Mumbai. “They’re placing sample orders now, but large scale shifts will depend on how stable the tariff regime looks after the U.S. elections.”
At Raft Garments, lines of sewers in pastel uniforms work silently under bright fluorescents. Managers hover over quality-control stations, sorting defective shirts by the dozens. “We’ve had 14 new buyer inquiries in recent weeks,” Sivasubramaniam said, watching a shipment of 3 million t-shirts pile up in cartons. “One order like that would be more than enough for us—if only we could put people to the machines.”
Nearby, 24-year-old seamstress Kavita Devi leans forward, eyes fixed on her needle. “I came for the \$180 monthly wage,” she said. “But two months in, I want to return home. They say there’s safety and better pay at the unorganized units near my village.”
Industry’s Push for Policy Tweaks
Garment associations are now lobbying New Delhi to ease some factory regulations and increase performance-based incentives. Proposals include allowing limited overtime, tax rebates on capital machinery, and streamlined labor-migration protocols. “If the government truly wants to position India as an alternative sourcing hub, it needs to remove these bottlenecks,” argued Mithileshwar Thakur of the Apparel Export Promotion Council.
For Walmart, India presents an attractive tariff edge; for India, the retailer represents a pathway to diversify its export markets beyond the West and deepen manufacturing ties with global supply chains. But unless India can reconcile its high operating costs and persistent worker scarcity, the benefits of a lower tariff may evaporate in the face of empty factory floors and missed delivery deadlines.
As global apparel supply chains realign under pressure from U.S. tariff policy, India’s garment industry finds itself at a crossroads. Factories are eager to capture the orders that once flowed to Bangladesh and Vietnam, yet struggle to find the workforce that made those markets competitive. The success of India’s tariff-driven window will hinge not only on policy tweaks and training drives, but on the industry’s ability to stem the tide of labor flight and deliver price-competitive, quality garments—before that window closes.
(Source:www.marketscreener.com)
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