New Delhi, Nov. 11 -- At Orient Craft's factory in Ranchi, hundreds of women stitch dresses, shirts and children's clothing for British retailers Next and Marks & Spencer.

Not long ago, most of Orient Craft's output would have gone to the US. But founder Sudhir Dhingra, 77, has cut shipments there since the US hiked tariffs, which rose to as much as 50% last year, hitting orders from customers including American Eagle and Gap.

Even with duties now lower and the possibility of a trade pact, Dhingra has decided it is too much of a risk to depend so heavily on one market.

"Even if there is a deal, what is the guarantee that it will hold water?" he said. "I don't wish to see that sword on my head."

Orient Craft is one of many Indian compa...