India exporters risk losing US orders without January trade deal

MUMBAI - Indian exporters of products ranging from home decor to leather shoes are worried about missing the US summer shopping season if they are unable to lock in orders in January as trade-deal talks drag on between New Delhi and Washington.

This will be the decisive month for sealing the trade pact so contracts can be secured for the first half of 2026, according to half a dozen local exporters who spoke to Bloomberg News. The punitive 50 per cent US tariffs since August already hurt the exporters’ order volumes in the typically busy winter and Christmas season in 2025.

One of the steepest levies imposed by the Trump administration continues to deal a heavy blow to India’s labour-intensive sectors, especially textiles, handicrafts, apparels, gems and leather.

Despite multiple rounds of talks, including four conversations between US President Donald Trump and Indian Prime Minister Narendra Modi since August, the slow progress in the trade deal has pressured the rupee and forced New Delhi to dole out US$5 billion (S$6.4 billion) to protect Indian exporters.

Mr Rafeeque Ahmed, chairman of Farida Group, which is one of the largest shoemakers in India, said that Jan 15 is the cut-off date for securing bulk orders from the US to ensure stable revenue for the summer and autumn seasons. The company derives about 60 per cent of its export revenue from American markets.

“I have cut down production by 20 per cent to 25 per cent and laid off workers,” said Mr Ahmed, who supplies to international brands like Cole Haan and Clarks. “How long can we sustain this and keep giving discounts?”

Mixed signals

Mr Trump, meanwhile, continues to send mixed signals. He told reporters on Jan 4 that high tariffs had pushed New Delhi to reduce Russian oil imports.

Mr Trump added that Mr Modi knew he was “not happy”, and because India trades with the US, “we can raise tariffs on them very quickly, and it would be very bad for them” – remarks that raised doubts about whether he intends to remain combative towards India or move to expedite a trade deal.

India’s oil imports from Russia in December fell 40 per cent from a June peak of 2.1 million barrels a day, a noticeable gain for Mr Trump, who has intensified efforts to choke off cash flows to Russian President Vladimir Putin’s war machine and end the Ukraine conflict. 

In 2024, before trade headwinds darkened sentiment, India shipped goods worth US$87.4 billion to the US, accounting for almost one-fifth of the country’s total exports. 

US government trade data shows apparel imports dropped by about 12 per cent to US$376 million in September 2025 compared with the year-ago period. Imports of rugs fell by 10 per cent to US$98.4 million over the same period. 

“If the deal doesn’t happen quickly then April-August and holiday shipping would be impacted,” said Mr Gautam Nair, director of apparel maker Matrix Design. “First half would then be a complete washout.”

As part of efforts to diversify its markets beyond the US, India in recent months has forged new free trade alliances with New Zealand, Oman and Britain. Negotiations with the EU, Australia, Chile and Peru are ongoing.

Salvaging relationships

To offset losses, many exporters are also scrambling to salvage supplier relationships by offering discounts or travelling abroad to secure new clients and reassure existing ones.  

Mr Lalit Thukral, founder of textile exporter Twenty Second Miles, said August through December is typically the busiest period for the industry, but this year it delivered losses instead. Preparing for tougher days ahead, he travelled to Britain with a 15-person delegation in November, looking for new customers.

Mr R.K. Sivasubramaniam, whose company makes basics like underwear, will visit the US in January to scout for buyers. He has cut his production since August by 50 per cent. 

“We are trying to get newer buyers but it is not possible to grab them immediately,” he said, adding that this work trip was crucial for his business. “Other US buyers are indefinitely gone.”

Mr Vijay Sethi, a director at Sethi Handicrafts, has lost several US clients despite offering discounts of as much as 20 per cent. The maker of home decor products, based in a town just outside of New Delhi, has meetings with US buyers lined up in January.

Finding workarounds 

Several gems and jewellery exporters are experimenting with costly workarounds to blunt the impact of the tariff. 

Some have set up US subsidiaries to manage trade locally, while others are shifting parts of their manufacturing to countries like the United Arab Emirates, where duties are about 15 per cent, said Mr Sabyasachi Ray, executive director of the Gem and Jewellery Export Promotion Council.

“They’ve had to change the way of doing business,” said Mr Ray. But the workarounds “have taken a toll.”

Apparel suppliers such as Raymond Lifestyle and Gokaldas Exports were among the firms considering moving some of their production to African countries. Gokaldas has four factories in Kenya and one in Ethiopia, while Raymond was looking to use its Ethiopia plant to supply American buyers, as tariffs in these countries are as low as 10 per cent.

“Exporters don’t have much choice right now,” said Dr Ajay Sahai, director general of Federation of Indian Export Organizations. “They are looking at alternative markets, selling locally, and one thing has become very clear – we can’t overly depend on the US for exports.” BLOOMBERG