Kenya Attracts Indian Factories as U.S. Trade Pressures Reshape Global Supply Chains

Rising trade tensions between New Delhi and Washington are prompting Indian manufacturers to rethink their global production strategies, with several firms now turning to Africa as a safer base for serving the U.S. market. Kenya, in particular, is gaining attention as companies seek to shield themselves from punitive tariffs and ongoing uncertainty surrounding U.S.–India trade talks.

The prolonged absence of a clear trade agreement has unsettled American buyers, many of whom are delaying commitments for the summer 2026 season. Exporters say the challenge has been compounded by a 50 per cent tariff imposed by the United States on Indian goods in August, a move that significantly dampened demand during what is typically the peak winter and Christmas export period.

Labour-intensive sectors such as textiles, apparel, leather products, handicrafts and gems have borne the brunt of the slowdown. With orders declining and delivery timelines tightening, some Indian manufacturers have started shifting sections of their production chains to African countries offering more competitive access to the U.S. market.

Kenya has emerged as a leading alternative due to its favourable tariff regime. Exports from Kenya to the United States attract duties of about 10 per cent, far lower than the levy imposed on Indian-made goods. Several Indian apparel and leather firms have already established or expanded operations in Kenya, using local factories to supply American buyers.

Industry leaders say timing is a key factor behind the relocation decisions. Rafeeque Ahmed, chairman of a major Indian footwear company that earns roughly 60 per cent of its export revenue from the U.S., said January is crucial for locking in bulk seasonal orders. Reduced demand has forced production cuts and job losses in India, a situation mirrored across the sector.

U.S. trade figures reflect the impact, showing apparel imports from India fell 12 per cent year-on-year to $376 million in September 2025, while rug imports declined by 10 per cent to $98.4 million.

For Kenya, the shift supports President William Ruto’s industrialisation and job creation drive, with the government prioritising textiles, apparel and leather under its Bottom-Up Economic Transformation Agenda and promoting Export Processing Zones and Special Economic Zones to attract foreign manufacturers.