Chennai/Coimbatore: Indian garment exporters are optimistic about a recovery in orders and a moderation in key raw material costs following the US-Iran peace deal. The industry, which was severely impacted last year by US tariffs and the subsequent West Asia conflict, anticipates fresh orders from the US and other key markets to revive in the coming months.
Recent Export Performance
Despite broader growth in May, ready-made garment (RMG) exports fell 14% in US dollar terms. The 4% decline in rupee terms indicates weaker demand beyond the effects of rupee depreciation. Industry bodies attribute this fall to war-related uncertainties and a high base effect from a rush to ship before US tariffs took effect.
The Tirupur Exporters Association (TEA) linked the decline to demand moderation in the US, which accounts for nearly one-third of India's total RMG exports.
Industry Expectations
Ashwin Chandran, chairman of the Confederation of Indian Textile Industry (CITI), stated that uncertainty over the war and shipping challenges had dented demand. However, he expects a recovery once the summer order cycle begins in August. “We expect this year to be stable to positive. While exporters could benefit from rupee depreciation, higher input costs and dollar-denominated packing credits have impacted the industry,” he added.
Analyst Views
Karthick Jonagadla, smallcase manager and founder of Quantace Research, noted that a recovery from August is plausible but will be a sequenced recovery rather than a broad rebound. “The first leg from August should show up in enquiry flow, order conversion, and margin relief. Export data may follow with a one- to two-month lag. FY26 apparel-export revenues are still expected to fall 3%-5%, before rebounding 8-11% in FY27, with margins recovering by about 200 basis points to 9.5%,” said Jonagadla.
He added that war-related cost increases and delivery delays disproportionately hurt micro, small, and medium players, which cannot absorb higher costs, longer lead times, and margin contraction. This could potentially allow some large players to gain market share from smaller units. “The street expects apparel exporters’ FY26 revenue to decline 6-9%, with operating margins compressing 200-300 basis points to about 7.5% from 10%,” he added.
Textile vs Apparel Exports
Textile exports, which mainly consist of yarns and fabrics, rose 2.47% in May 2026 on better demand from Bangladesh and China. Apparel, however, declined for a second straight month, with April-May 2026 exports down 12.98%.
