Walmart in India: Apparel Sourcing Surge

U.S. Tariffs Shift Sourcing to India — But Can India Deliver?

U.S. importers are rethinking their sourcing models. American retailers are urgently looking for alternatives. This comes after new tariffs: 145% on China, 46% on Vietnam, and 37% on Bangladesh. India, sitting at 26%, has emerged as a leading candidate. The United States Fashion Industry Association states that about 60% of top U.S. apparel brands aim to boost sourcing from India in 2024.

But India’s competitive edge on paper is facing ground-level friction. Tiruppur is India’s center for knitwear exports. However, it faces challenges. It lacks skilled workers, has limited scalability, and struggles with price flexibility. The market shift is real, but India’s ability to meet it is uncertain.

How Walmart in India deals with Labour Shortages

Despite a massive demand surge, production lines in Tiruppur are underutilized. Idle machines aren’t due to a lack of orders—they’re due to a lack of skilled hands.

• Tiruppur alone needs over 100,000 more workers
• 90% of India’s labour force remains in the informal sector
• Trained workers often leave after a few months. They move to smaller companies that provide longer hours and better pay.

Raft Garments supplies basics to Walmart in India and oversea and Costco, but it can’t grow. The high turnover of workers holds them back. Automated stitching machines are coming in. However, they can’t fully replace skilled tailors.

Training Alone Won’t Fix the Labour Gap

The Indian government extended training for 300,000 textile workers. But initiatives aren’t translating into long-term manpower retention. Exporters must set up training centers in various states. Sadly, workers often leave after just a few months.

This scattered workforce makes supply chains hard to predict. As a result, U.S. buyers hesitate to make large commitments.

Factory Scale Is Still Too Small

India’s apparel industry lacks economies of scale when compared to Bangladesh or Vietnam.

Bangladesh factories dominate because of larger facilities, higher output, and lower overheads. In contrast, India remains highly fragmented:

• The top 100 exporters in Tiruppur contribute 50% of exports
• The remaining 2,400+ units produce the other half

This fragmentation makes coordination, quality assurance, and speed-to-market more challenging.

Price Sensitivity Remains a Dealbreaker

Despite tariff advantages, U.S. retailers are demanding Bangladesh-level prices from Indian exporters. But India’s labour cost ($180/month) is higher than Bangladesh’s ($139/month) and compounded by:

• Stricter compliance norms
• Regulated overtime limits
• Worker welfare obligations

Retailers like Walmart have doubled imports from India each year. However, sourcing depends on cost concessions. Raft Garments says a new order of 3 million units could fill their capacity. But this will only happen if they solve pricing issues. Walmart in India is looking to capitalize on such opportunities.

Freight and Logistics Drive Momentum — For Now

From April 2 to May 4, Walmart imported more than 1,100 containers of clothing from India. This is double the amount from the previous year. That includes:

• Cotton shirts
• Pleated maxi skirts
• Everyday basics like underwear

But this increase masks deeper operational strain. If India can’t keep up with speed and price targets, those orders might be redirected from Walmart in India.

Sourcing Shift Map 

What Indian Apparel Exporters Must Do Now

1. Consolidate Production: Form manufacturing clusters to reduce fragmentation and pool labour across units.
2. Boost Labour Retention:
   • Offer performance bonuses.
   • Create skill-building paths.
   • Connect with rural jobs to reduce dropouts.
3. Use Automation Wisely: Automate simple tasks. Keep the human touch for finishing and design quality.
4. Government Aid for Costs: Check for state subsidies, tax breaks, and zones for clothing exporters. This will help balance out labor cost challenges.

Tariffs Gave India the Spotlight—Now It Must Earn the Stage

India stands at a pivotal moment in global apparel sourcing. The tariff bump offered new chances, but labor shortages, high costs, and inefficiencies are slowing the country down.

Right now, global buyers are keeping an eye on Tiruppur. But if India can’t compete on price, size, and reliability, attention will quickly move elsewhere.