Apparel Exporters Eye Stability as Global Tensions Ease

Industry veterans and market analysts predict a gradual rebound in garment orders starting this August as raw material costs soften and geopolitical uncertainties begin to recede.

The Indian garment sector is breathing a cautious sigh of relief. After months of being buffeted by the dual headwinds of US tariff-related inventory rushes and persistent West Asian instability, textile hubs from Tirupur to Chennai are recalibrating for a potential turnaround. While Ready-Made Garment (RMG) exports took a 14% hit in dollar terms this past May, the sentiment on the ground is shifting from defensive survival to measured optimism.

Industry leaders, including the Confederation of Indian Textile Industry (CITI), point to the upcoming summer order cycle as the catalyst for this recovery. Ashwin Chandran, chairman of CITI, notes that while shipping challenges and geopolitical friction have severely dampened demand in the US—a market that accounts for one-third of our total RMG shipments—the stabilization of trade relations offers a much-needed window for growth.

The Mechanics of the Recovery

Market analysts view the expected rebound as a sequenced process rather than a sudden spike. Karthick Jonagadla, founder of Quantace Research, suggests that the industry should first see an uptick in enquiry flows and order conversions by August, with actual export data likely to reflect these gains with a one- to two-month lag.

However, the road ahead is bifurcated. While the industry expects a general recovery, the internal economics are shifting. Large players are better positioned to weather the margin compression and delivery delays that have plagued the sector, while micro, small, and medium enterprises (MSMEs) continue to struggle with higher input costs and expensive dollar-denominated packing credits. This disparity may lead to a consolidation of market share, where only the most agile units survive the current contraction.

Why it Matters

The bigger picture suggests that the apparel industry is entering a period of structural adjustment. While FY26 revenue for apparel exporters is expected to see a decline of 6% to 9% as margins compress, the long-term outlook for FY27 remains bullish, with a projected revenue rebound of 8-11%.

This transition period highlights the vulnerability of Indian exporters to external shocks—be it trade tariffs or distant conflicts. The recent 2.47% rise in yarn and fabric exports to markets like Bangladesh and China shows that demand is not dead; it is simply shifting. For the industry, the recovery will hinge on how effectively firms can manage raw material costs and mitigate the high-interest burden of dollar-denominated debt. If the August order cycle holds, it won’t just be a seasonal uptick, but a vital correction for an industry that has been stretched thin by a year of volatility.