Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director of Gokaldas Exports, warns that labour-intensive sectors such as apparel and textiles remain vulnerable due to India’s high tariff disadvantage in the US compared with competing Asian nations.
While exports have not yet been hit materially, he flags 2026 as a potential inflection point if tariff issues persist, noting that diversification away from the US is necessary but time-consuming and difficult given the lack of equally large alternative markets.
At the same time, Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations, highlights the broader resilience of Indian exports, driven by stronger demand from regions such as West Asia, Africa, Latin America, and ASEAN, and improved competitiveness in engineering, pharma and value-added manufacturing.
These are the edited excerpts of the interview.
Q: Textile exports were up 8% year-on-year in the month of November, and 8% month-on-month as well, November over October. Is it is generally not just the US, or is textile demand reasonable at this time?
Ganapathi: Textile demand is reasonable, but the fear is not near-term; the fear is 2026. The tariff has remained high at 50% from the United States, and that is a very large market. If you look at apparel, about 5.3 billion goes into the United States out of our 16 billion of exports. So more than a third goes into that particular market, and the US continues to remain a single large country which buys. China is another large market. However, China makes for China, so it is not really a market for us. In addition, Europe is fragmented. It is growing and is a large market. However, it’s well served from India for now, and it’s better served from some of our competing countries, which have duty-free access to Europe.
A loss of the US market has not really hit the export numbers for now. One of the reasons is the momentum, stemming from the fact that Indian exporters, particularly in sectors affected by tariffs, such as apparel and textiles, have also shared the tariff burden with their customers. Therefore, for now, it is in a holding pattern.
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However, I worry for 2026, and unless the tariff goes away, or some resolution is found to the penal tariff of 25% we may find that the demand going forward may slow down, as today, both the brands and the suppliers are bearing the extra cost. In some ways, you could call it is a lose-lose deal. So, it is waiting for a turnaround from that perspective.
Q: You mean that your principals or your counterparties are ready to share up to a point. However, in the middle of next year, they may want to change their mind and look for other suppliers, you say, if the burden of 30% penal tariffs do not go away?
Ganapathi: That is correct. So ours is 50%, whereas the rest of Asia, which is all our neighbouring competing countries, are at 20%, so we have a 30% delta vis-à-vis other competing countries. Remember that electronics manufacturing and some other sectors don’t seem to have this issue because they have a tariff exemption. However, the sectors which have been impacted by the penal tariff would see some atrophying of business, particularly from the United States, as there are other neighbouring countries which could be far more competitive.
Q: Let me quote the US numbers again to you. India’s exports to the US are up 22.6% for November. They are up 10% month-on-month from November over October, and they are up 11% if you take the full eight months, April to November, 25 over 24. Textiles, we have got a view, but more widespread, other exporters, what are they telling you? Are they able to find rival destinations? How come the exports to the US are so good?
Sahai: If you look into the US, roughly 55% of India’s exports is impacted by tariffs, and 45% are in either the exempt category or where we have a level playing field. In 55% of the exports, as told by the previous speaker, most of the exporters are taking a heavy hit, and they are continuing with the buyers because they feel that if buyers move to some other geography, even when we have the BTA, it may not be possible to bring back the buyers. But though the disaggregated number for the US is not available, we feel that it is largely because of the export of the smartphone, probably, which is growing very rapidly.
We have to see the other components also. I am not sure whether in apparel and textiles now, we are growing or not growing because it’s not that all exporters are taking the hit and continuing with the business. Those who are supplying to the brands, and probably the brands, have deep profits; they have large margins also, and they are managing it. So it is a really mixed picture in the US. Of course, 22% growth is very, very encouraging, but once the disaggregated numbers are available, we will be able to respond better on that.
Q: The overall picture for November exports is up 19% as a whole compared to November of 24, and they are up 11% over October. Even if you took April to November, those eight months, the growth year-on-year is decent – like some 6% in total exports. So, it seems that generally, the other areas are demanding well, or Indian exporters to the US have been able to find rival destinations like those that we hear about, marine – the shrimp farms apparently are being bought by China and Japan?
Sahai: I would say that at this point of time, I personally feel that this is not an aberration. Probably, this is a trend which will continue to show the resilience of the industry; they are diversified. We have also moved into the value-added segment. In some of the geographies, we are doing it very well. When you are looking into the region, probably in West Asia, Africa, Latin America, and even ASEAN, we are doing very well. In some of the sectors, we are doing exceptionally well; for example, if you are looking into the engineering sector, it is showing growth because many of the emerging economies are investing in infrastructure, leading to the demand for general goods.
In some of the engineering sectors, particularly in electrical machines and capital goods, we have become very competitive. If you are looking into pharma, probably global companies are looking for an alternative supply chain where India is emerging. In the petroleum sector, the refining margins have improved, and that is showing good results in petroleum exports.
In the agri and food sector, the rupee has definitely provided some competitiveness. And since the logistics costs have also been softened, this is helping us. So both in the geographies and in the product, we are doing very well in that part. We are now firmly assured that, probably, the US tariff is not going to hit India, we will be able to recover those losses in the rest of the geographies, though, of course, this will be a medium- to long-term strategy which will help us to move into that direction.
Q: What is your sense, Sivaramakrishnan – to what extent can you diversify, can apparels generally diversify away, like the shrimp guys have done?
Ganapathi: Diversification is the mantra because we are living in a super-volatile world. Even if, let us say, the penal tariff goes away, what stops it from coming back? So it’s always good to diversify, and all companies should take the diversification strategy, and we are doing it too. The only problem is that there are no very large markets like the United States and large retailers, or even a large concentration of buyers, which the US has. The diversification itself takes time. And unlike shrimp etc. where they could find the Chinese market for manufactured goods, China is not the destination, because China is very good at it. So we will have to find other markets, and there are not many other large markets like us, so it’s not easily replaceable. It takes two to three years.
For the entire discussion, watch the accompanying video
