US demand slowdown hits apparel, diamond exporters as factories shut and orders

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The Economic Times daily newspaper is available online now. Read Today's Paper US demand slowdown hits apparel, diamond exporters as factories shut and orders dry upBy Sutanuka Ghosal, ET BureauLast Updated: Oct 29, 2026, 12:16:00 AM ISTSynopsis

The apparel industry in Noida is experiencing significant upheaval, with a reduction of operational units from 2,400 to 1,800 in just six months, all due to a decline in orders. The unpredictable US tariffs have caused confusion in negotiations and production timelines. In a related trend, Surat's diamond manufacturers have extended their Diwali shutdowns, resulting in the closure of roughly 300 small businesses.

Kolkata: With US tariff uncertainty clouding the export outlook and orders from the American market thinning, apparel exporters in Noida and natural diamond manufacturers in Surat are resorting to austerity measures to protect margins.

Noida's apparel units have shrunk to 1,800 from 2,400 over the past six months, while Surat's diamond factories have extended their Diwali shutdowns to 25 days this year from 15 days last year, reflecting the deepening strain on export-oriented manufacturing. "Unless the India-US bilateral trade agreement is in place, there is no chance of reopening of the units," said Lalit Thakrul, president of the Noida Apparel Exporter Cluster.

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Apparel exports from Noida are expected to decline to about ₹42,000 crore in this financial year from ₹48,000 crore in 2025-26, as orders from the US slow, Thakrul said. Employment in the sector has also taken a hit, with the number of workers falling to about 800,000 from around one million.

The prolonged uncertainty is hurting exporters beyond the immediate cost of tariffs, disrupting order negotiations, production schedules and working capital. "For Noida's apparel exporters, the past six months have demonstrated that uncertainty can be more damaging than the tariff itself. The real concern is not merely the additional duty on Indian garments entering the US, but the disruption it creates in order negotiations, production planning, working capital and long-standing buyer relationships," said Kapil Sadh, partner at Noida-based SK Overseas.

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Apparel manufacturing follows seasonal calendars, with fabric procurement, sample approvals, labour deployment and shipments tied to narrow retail windows. When buyers delay orders, seek price reductions or reconsider sourcing plans, manufacturers continue to bear costs even as revenues become uncertain. "The uncomfortable reality is that an exporter can retain an order and still lose money," Sadh said.

Also Read: India’s gem and jewellery exports up 9.43% on-year in September

American buyers may seek lower prices or shift sourcing destinations, while Indian manufacturers remain committed to wages, supplier payments, bank repayments and factory overheads. Fabric bought for postponed orders can become stranded inventory, while working capital tied up in unfinished production cannot be used to finance fresh orders.

Sadh warned that the longer-term risk lies in losing buyers to competing hubs such as Bangladesh, Vietnam, Indonesia and Cambodia. If international brands shift their sourcing programmes to these countries, Indian exporters may struggle to win back orders even if tariff arrangements improve. The slowdown is also affecting Surat, the country's diamond cutting and polishing hub. Manufacturers have extended their Diwali holidays, as demand from the US has weakened and orders from China, another major market for Indian diamonds, remain subdued.

"In the last six months, 300 small units have also closed down," said Bhavesh Tank, vice president of the Diamond Workers Union, Gujarat. The pressure across the two export hubs highlights how uncertainty in key overseas markets can ripple through India's manufacturing supply chains, affecting workers, suppliers and ancillary businesses.
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Read More News onUS apparel exportsUS tariff uncertaintydiamond manufacturers in Suratdecline in export ordersNoida Apparel Exporter Clusterimpact of tariffs on exportersinternational sourcing programsIndian diamond marketemployment in apparel sector

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Read More News onUS apparel exportsUS tariff uncertaintydiamond manufacturers in Suratdecline in export ordersNoida Apparel Exporter Clusterimpact of tariffs on exportersinternational sourcing programsIndian diamond marketemployment in apparel sector

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

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