Indian manufacturers are increasingly looking to Africa, particularly Kenya, as an alternative production base as prolonged trade negotiations between India and the United States disrupt export flows and threaten access to the lucrative American market.
Uncertainty over a delayed U.S.-India trade agreement has made American buyers cautious, with exporters warning they risk missing the critical January contracting window for summer 2026 orders. The situation worsened after the United States imposed a steep 50 per cent tariff on Indian exports in August, sharply reducing order volumes during the 2025 winter and Christmas season.
Labour-intensive sectors such as textiles, apparel, leather goods, handicrafts and gems have been hardest hit. Faced with shrinking orders and tight delivery timelines set by U.S. buyers, some Indian companies have begun relocating parts of their manufacturing operations to African countries with more favourable trade terms.
Kenya has emerged as a preferred destination due to its significantly lower tariff exposure when exporting to the United States. Goods shipped from Kenya attract duties of about 10 per cent, compared with the 50 per cent levy on Indian-made products. Several Indian apparel and leather manufacturers have already set up or expanded factories in Kenya, with some supplying American clients directly from their African operations.
Industry executives say the shift is driven by the need to meet strict seasonal deadlines. Rafeeque Ahmed, chairman of a major Indian footwear manufacturer that earns around 60 per cent of its export revenue from the U.S., said January is a decisive period for securing bulk orders. Falling demand has forced production cuts and job losses in India, a trend echoed across the sector.
U.S. trade data highlight the impact, with apparel imports from India dropping by 12 per cent year-on-year to $376 million in September 2025, while rug imports declined by 10 per cent to $98.4 million.
In Kenya, the move aligns with President William Ruto’s industrialisation and job creation agenda. The government has prioritised textile, apparel and leather manufacturing under its Bottom-Up Economic Transformation Agenda, promoting Export Processing Zones and Special Economic Zones to attract foreign investment and expand export-led employment.