Sept 18 (Reuters) - Indian textile manufacturer Gokaldas

Exports plans to boost shipments to the European Union

and the United Kingdom, and expand production in Africa, as

punitive U.S. tariffs threaten to sap profits, the company's top

executive said.

Gokaldas, which makes about 75% of its standalone sales in

the United States and counts Walmart ( WMT ), Gap, and

JCPenney among its clients, expects its quarterly core profit

margin to shrink to single digits from around 12% in the first

quarter of fiscal 2026.

The textile manufacturer produces about 90 million garments

annually, with exports to the U.S., Canada, the UK and France

accounting for the bulk of its 38.64 billion rupees ($438.97

million) in revenue from operations in fiscal 2025.

"If the reciprocal tariff of 50% continues in the long term,

it would be difficult to do business with the United States. The

tariff would act as a serious barrier," Gokaldas' Managing

Director Sivaramakrishnan Ganapathi told Reuters.

Gokaldas has been offering discounts and absorbing some of

the costs tied to the higher U.S. tariffs to maintain client

relationships.

U.S. retailers are awaiting the outcome of U.S.-India trade

talks before making further changes to their supply chains.

But Ganapathi warned, "People will do that for one quarter

or two ... not beyond."

India's $38 billion textile export sector has been

struggling with higher U.S. tariffs, which are significantly

steeper than those on competing countries such as Bangladesh and

Vietnam, both facing a 20% reciprocal levy.

Gokaldas has been gradually shifting part of its production

to Kenya and Ethiopia, where tariffs are lower, after some

clients requested that products originate from Africa. Both the

countries face a baseline 10% tariff rate.

The company has been ramping up exports to the United

Kingdom and the European Union, aiming to double their combined

revenue share from 10% within two years, as the UK-India Free

Trade Agreement takes effect.

($1 = 88.0250 Indian rupees)