Walmart and Costco turn to India to avoid high US tariffs, but garment workers scarce

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.

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"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 J. Trump plans to hit India, the world's sixth largest textile and apparel exporter, with a 26% tariff from July, below the 37% imposed on Bangladesh, 46% on Vietnam and 145% 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.