Posted on August 10, 2025
Panipat, Haryana, often called India’s “Textile City,” is a global hub for yarn, home textiles, and recycled fabrics. However, the U.S.’s recent imposition of steep tariffs on Indian exports is sending shockwaves through the local yarn industry. With the U.S. being a key market for Panipat’s cotton and recycled yarns, these tariffs are reshaping supply chains, pricing, and market strategies. In this blog, we explore the current tariff landscape, its impact on Panipat’s yarn trade, and what it means for local spinners, exporters, and crafters. Let’s dive into the challenges and opportunities ahead!
The 2025 U.S. Tariffs: A Blow to Indian Textiles
In 2025, the U.S. introduced tariffs ranging from 10% to 50% on imports from India, driven by trade policies under the Trump administration aimed at addressing trade imbalances and geopolitical tensions, particularly India’s oil imports from Russia. For the textile sector, these tariffs are particularly harsh:
• Cotton Yarn and Textiles: Indian textile exports, including cotton yarn, face a 50% tariff effective August 27, 2025, up from a 10% base rate in April. This includes knitted apparel (63.9% effective tariff), woven apparel (60.3%), and home textiles (59%), which are core products for Panipat.
• Recycled Yarns: Panipat’s recycled polyester-cotton (PC) yarns, a specialty of the region, are also hit hard, with prices rising due to restricted imports of textile waste from Bangladesh, compounded by the U.S. tariffs.
• De Minimis Exemption Ending: Starting August 29, 2025, the U.S. will eliminate the $800 duty-free threshold for low-value shipments, increasing costs for small-scale yarn exporters and online retailers.
These tariffs, significantly higher than those on competitors like Bangladesh (20%), Vietnam (20%), and China (30%), threaten India’s competitiveness in the U.S. market, which accounts for 28–33% of its textile exports, valued at $10.3 billion in FY25.
Panipat’s Yarn Market: Struggling Under Tariff Pressure
Panipat’s yarn industry, with an annual turnover of approximately ₹60,000 crore and ₹20,000 crore in exports, is heavily reliant on the U.S., which absorbs 60% of its export market. The 50% tariff is a severe blow, especially as the industry was already reeling from global challenges like the Russia-Ukraine war, rising freight costs, and inflation in Europe and South America.
• Cotton Yarn Market: In Panipat, cotton yarn prices have remained stable but demand is sluggish. Buyers are delaying orders or seeking discounts due to fears of reduced U.S. demand. For instance, 30-count combed knitting yarn in nearby Delhi trades at ₹259–260 per kg, while in Ludhiana, it’s ₹260–270 per kg, reflecting cautious trading amid tariff uncertainty.
• Recycled Yarn Surge: Paradoxically, Panipat’s recycled PC yarn prices have risen by ₹10–12 per kg (e.g., 10s grey PC yarn at ₹75–78 per kg) due to a scarcity of textile waste imports from Bangladesh, halted by India’s Directorate of Revenue Intelligence for political reasons. However, demand for coarse-count recycled yarns has weakened post-winter.
• Local Sentiment: Vinod Dhamija, President of the Haryana Chamber of Commerce and Industry (HCCI), Panipat Chapter, warned that the tariff hike will disrupt the critical Christmas and summer season orders, reducing competitiveness against countries like Bangladesh and Vietnam. Exporters fear a 40–50% drop in export volumes, translating to a $2.5–3 billion revenue loss.
Local traders report that even domestic demand is shifting to cheaper polyester and viscose yarns due to cotton’s high costs and export uncertainties.
International Context: A Competitive Disadvantage
Globally, India’s yarn exporters face stiff competition. The U.S. tariffs on Indian textiles (50%) dwarf those on Bangladesh (20%), Vietnam (20%), Pakistan (19%), and Turkey (15%), giving these countries a price advantage. In Tiruppur, India’s knitwear capital, exporters are losing orders to these competitors, and Panipat faces similar risks.
• Trade Negotiations: The U.S. extended a tariff pause until August 1, 2025, but this failed to stimulate North India’s yarn market. India’s government is urged to negotiate a bilateral trade deal or seek World Trade Organization (WTO) intervention to mitigate the impact.
• Industry Response: The Confederation of Indian Textile Industry (CITI) and Apparel Export Promotion Council (AEPC) have called the tariffs a “huge setback,” urging government support through export incentives and cheaper credit for micro, small, and medium enterprises (MSMEs).
Despite these challenges, a Crisil report projects a 7–9% revenue growth for India’s cotton yarn industry in FY25, driven by domestic demand recovery and export rebounds to non-U.S. markets.
What This Means for Panipat’s Yarn Community
For Panipat’s yarn spinners, exporters, and crafters, the tariffs mean higher costs and reduced U.S. market access. Small businesses, already grappling with labor shortages and payment delays, face the risk of order cancellations and layoffs. Crafters may see price hikes for cotton and blended yarns, with a skein of 30-count combed yarn potentially rising by 10–20% at local shops.
However, Panipat’s resilience shines through. The city’s expertise in recycled yarns offers a niche advantage, and exporters are exploring alternative markets like South Asia, Europe, and South America. The Union Budget 2025-26’s allocation of ₹52.7 billion for textiles and cotton productivity initiatives could bolster local spinners.
Tips for Panipat’s Yarn Enthusiasts and Businesses
1. Source Locally: Support Panipat’s spinners and dyers, who produce high-quality cotton and recycled yarns. Check for domestically sourced fibers to avoid tariff-driven costs.
2. Explore Alternative Markets: For exporters, consider diversifying to markets like the UAE or EU, where India has Free Trade Agreement (FTA) benefits.
3. Leverage Government Support: Utilize Production Linked Incentive (PLI) schemes (₹10,683 crore) and export incentives to offset tariff impacts.
4. Stock Up Smartly: Crafters and small shops should consider buying yarn before August 29, when the de minimis exemption ends, to secure current prices.
5. Stay Connected: Join local textile associations or online communities to share strategies and stay updated on tariff negotiations. Follow platforms like TariffCheck.org for real-time trade updates.
Looking Ahead: Panipat’s Path Forward
The 2025 U.S. tariffs pose a formidable challenge for Panipat’s yarn industry, threatening its $20,000 crore export market. Yet, the city’s legacy of innovation—especially in recycled yarns—and government support offer hope. By diversifying markets, leveraging domestic demand, and advocating for trade relief, Panipat can navigate this storm.
How are the tariffs affecting your yarn projects or business in Panipat? Are you finding creative ways to adapt, like sourcing local yarns or exploring new markets? Share your thoughts in the comments, and let’s keep Panipat’s textile community thriving! Subscribe to our newsletter or follow us on social media for the latest updates.
Sources: Fibre2Fashion, Tribune India, Dainik Tribune, Textile Trade Buddy, INDmoney
