Walmart turns to India to avoid high tariffs, but garment workers scarce

Kuwait Times

11-05-2025

American retailers ramp up queries to India apparel hub
TIRUPPUR, India/DHAKA, Bangladesh: In a garment hub in south India, R K Sivasubramaniam is fielding requests from Walmart and Costco who want to sidestep higher US tariffs faced by rival Asian suppliers, Bangladesh and China. But rows of idle sewing lines at his factory lay bare his biggest challenge. 'Even if orders come, we need labor. We don't have sufficient labor,' said the managing director of Raft Garments which supplies underwear and t-shirts priced as low as $1 to US brands.
Considered India's knitwear capital, Tiruppur city in the southern state of Tamil Nadu accounts for nearly one-third of the country's $16 billion in apparel exports, and is staring at a huge opportunity as US buyers explore ramping up sourcing from India in the face of heftier tariffs on other Asian hubs. US President Donald Trump plans to hit India, the world's sixth largest textile and apparel exporter, with a 26 percent tariff from July, below the 37 percent imposed on Bangladesh, 46 percent on Vietnam and 145 percent on China - all of which are bigger American suppliers.
Those tariffs will make apparel from India much more competitive with both Bangladesh and China. But the mood is somber at the Tiruppur textile park as it faces a reality check: India's hopes of capitalizing on its tariff advantage are hindered by a skilled labor crunch, limited economies of scale, and high costs. Raft Garments wants to expand production to tackle new orders but is importing high-end machines to automate some stitching processes, given the business for now heavily depends on migrant labor, which is very tough to find or retain. Garment exporters in India say workers have to be trained and many leave within months to work at smaller, unorganized units that allow longer hours and pay more. The larger manufacturers can't match them due to foreign clients' requirements on cost and workers' conditions, according to Reuters interviews with 10 manufacturers and apparel exporter trade groups representing 9,000 businesses.
Prime Minister Narendra Modi has for years courted foreign investors to his 'Make in India' program to turn the South Asian nation into a global manufacturing hub. A shortage of skilled workers in a nation where 90 percent of the labor force operates in the informal sector is seen as a big roadblock, especially in labor-intensive sectors like garments.
Tiruppur offers a glimpse of India's labor strain. 'We need at least 100,000 workers,' said Kumar Duraiswamy of the exporters association in Tiruppur, where he said more than 1 million people currently work. Modi's government last year said it was extending a program to specifically train 300,000 people in textile-related skills, including garment making.
In the textile hub, some have taken matters into their own hands. Amid a hum of sewing machines at the Cotton Blossom factory, which makes 1.2 million garments a month, including for American sporting goods retailer Bass Pro Shops, Naveen Micheal John said he has set up three centers thousands of miles away to train and source migrant workers.
And even then, most return to their home towns after a few months. 'We skill them there for three months, then they are here for seven months. Then they return back,' John said during a tour of his garment unit, adding he wants to look at other states where labor and government incentives both may be better.
China's $16.5 billion worth of apparel exports, Vietnam's $14.9 billion and Bangladesh's $7.3 billion made them the three biggest suppliers to America in 2024, when India shipped goods worth $4.7 billion, according to US government data.
US companies have for years been diversifying their supply chains beyond China amid geopolitical tensions. And even before the news of tariffs in April, now paused until July, Bangladesh's garment industry began losing its sheen amid political turmoil there. A survey of 30 leading US apparel brands by the United States Fashion Industry Association showed India had emerged as the most popular sourcing hub in 2024, with nearly 60 percent of respondents planning to expand sourcing from there.
With the tariffs, India's exports would cost $4.31 per square metre of apparel, compared with $4.24 for Bangladesh and $4.35 for China, a sharp improvement on India's competitiveness without the levies, according to Reuters calculations based on 2024 import data from the US Office of Textiles and Apparel. But it's in the economies of scale where India loses. Bangladesh Garment Manufacturers and Exporters Association says an average garment factory there has at least 1,200 workers, whereas in India, according to its Apparel Export Promotion Council, there are only 600 to 800.
'Bangladesh capacities are huge ... We have issues of capacity constraint, lack of economy of scale due to smaller size of factories, labor unavailability during peak seasons,' said Mithileshwar Thakur of the Indian trade group. To address those challenges, garment makers have started to set up factories in states where migrant workers come from, he said.
In Tiruppur, its exports association says the largest 100 exporters contributed 50 percent of its $5 billion sales last fiscal year, with the rest from 2,400 units, a telling sign of the fragmented and largely smaller-scale operations. Raft makes 12 million garment pieces a year with a workforce of just 250 people. A US client is close to placing an order for 3 million units, which will stretch the factory to its limit and force it to consider expansion. 'This one order is more than enough for us,' said Sivasubramaniam. – Reuters