Jerash Holdings (US), Inc. (JRSH): PESTLE Analysis [Nov-2025 Updated]

You need to know if Jerash Holdings (US), Inc. can maintain its competitive edge as a major apparel manufacturer in a volatile 2025. The company is projected to hit $140 million in Fiscal Year 2025 revenue and $7.5 million in net income, but that success hinges on navigating a complex external environment. The US-Jordan Free Trade Agreement (FTA) is a massive tailwind, but it's constantly tested by Middle East geopolitical instability and rising Jordanian labor costs. We've mapped out the full Political, Economic, Sociological, Technological, Legal, and Environmental (PESTLE) forces to give you a clear, actionable view of the near-term risks and opportunities shaping their strategy.

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Political factors

You're operating a business whose entire model is built on a political agreement, so it's defintely not enough to just watch the news; you have to track policy shifts like they're daily stock prices. For Jerash Holdings (US), Inc. (JRSH), the political landscape in 2025 presents a clear duality: a massive competitive advantage from the US-Jordan Free Trade Agreement (FTA) is now directly offset by acute geopolitical supply chain risks and volatile US trade policy.

US-Jordan Free Trade Agreement (FTA) provides duty-free access to the US market.

The US-Jordan FTA, fully implemented since 2010, is the bedrock of JRSH's competitive edge, allowing nearly all Jordanian exports to enter the US duty-free. This is critical because the textile sector, where JRSH operates, is the primary beneficiary. To give you an idea of the scale, Jordan's apparel exports-which are 95% of its total textile exports-soared to $1.664 billion in 2024, representing a 25% year-on-year increase, largely driven by US demand. This zero-tariff status creates a significant, quantifiable cost advantage over major competitors in Asia.

The older Qualifying Industrial Zones (QIZ) program, which requires a minimum of 35% local content for duty benefits, is still active but has become less critical since the FTA's full implementation. The FTA's simplicity and broader scope have effectively superseded the QIZ as the main driver of trade, but the QIZ framework remains an important political symbol of US-Jordan-Israel economic cooperation.

US trade policy shifts could impact the FTA's long-term benefits.

This is the biggest near-term risk. The political stability of the FTA was severely tested in 2025 by shifting US trade policy. In April 2025, the US announced new, wide-ranging tariffs that directly challenged the FTA's duty-free status. Initial estimates suggested a 20% tariff on all non-car imports, which, if fully implemented, would have immediately raised JRSH's cost of goods and crushed its price advantage.

Here's the quick math: a 20% tariff on a sector responsible for over $1.6 billion in exports is a massive blow. The Jordanian government is actively negotiating, and reports from August 2025 indicate Jordanian exports are now facing a lower, but still significant, applied tariff rate of around 15% on some goods, compared to much higher tariffs on competitors like Vietnam (46%) and Bangladesh (35-37%). This volatility is the risk. The threat of a tariff-induced slowdown is real, with initial estimates suggesting a 20% to 30% drop in exports could lead to the loss of 10,000 to 15,000 direct jobs in the garment sector.

• Monitor US-Jordan trade negotiations weekly.
• Diversify export markets beyond the US to mitigate tariff risk.
• Quantify the 15% tariff impact on gross margin for fiscal year 2026 projections.

Geopolitical instability in the Middle East poses supply chain and security risks.

The regional geopolitical turmoil, particularly the Red Sea crisis that began in late 2023, has translated directly into operational and financial challenges for JRSH in its Fiscal Year 2025. The Houthi attacks isolated Jordan's only seaport, Aqaba, from key trade routes, delaying or stopping the delivery of essential raw materials like fabrics, which are primarily sourced from Asia.

The impact was concrete: JRSH's revenue for the full Fiscal Year 2025 reached a record $145.8 million, but logistics challenges at Israel's Haifa port-a common export route for Jordanian goods-directly impacted the bottom line. The bombing of the Haifa port forced the company to seek alternate, slower shipping routes through Aqaba, which deferred approximately $3-4 million of shipments into the first quarter of Fiscal Year 2026. This is a clear example of how regional conflict immediately converts to delayed revenue recognition and increased operational expense.

To be fair, the shift to Aqaba is also an opportunity for Jordan's logistics infrastructure. Data from the Jordanian Logistics Syndicate showed containers arriving at Aqaba port increased by 19.1% in the first nine months of 2025 compared to the previous year, suggesting a successful, albeit forced, rerouting of regional trade.

Jordan's government actively supports the textile sector through Qualified Industrial Zones (QIZ).

The Jordanian government is actively working to make the textile sector more resilient, a political commitment formalized in the Economic Modernisation Vision (EMV). This vision is a long-term strategic plan to attract $3.1 billion in Foreign Direct Investment (FDI) and boost total exports to $5.5 billion by 2033.

The government is using regulatory and policy tools to help manufacturers like JRSH navigate the current environment:

This government support acts as a political stabilizer, helping the sector-which employs over 90,000 workers-absorb external shocks like the Red Sea crisis and the volatile US tariff discussions.

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Economic factors

The economic landscape for Jerash Holdings is a study in two halves: strong currency stability in Jordan that offsets global volatility, but persistent, localized cost pressures that squeeze gross margins. Your core challenge is managing the rising cost of labor and logistics against the backdrop of a slightly softening global retail demand.

Here's the quick math on your cost base: The garment sector minimum wage increase is a manageable headwind, but the combined effect of higher utility and raw material costs is defintely the bigger near-term risk to your full-year gross margin goal of 12-14 percent for Fiscal Year 2025.

Inflationary pressures in Jordan are increasing raw material and utility costs.

While Jordan's overall inflation is contained, the costs for key inputs are still rising, which directly impacts your Cost of Goods Sold (COGS). The annual headline inflation rate in Jordan is projected to be around 2.2 percent to 2.4 percent for 2025, according to World Bank and IMF forecasts, with the Central Bank of Jordan reporting an average of 1.86 percent for the first ten months of 2025.

This moderate headline number hides the real pressure points for a manufacturer like Jerash Holdings. Utility costs, particularly energy, are rising, and the country's increased reliance on food imports can drive up local food prices, which in turn pressures wages even outside of mandatory minimum wage hikes. The Red Sea shipping crisis in early Fiscal Year 2025 already caused a significant spike, leading to a negative impact of approximately 440 basis points on the gross margin for the fiscal 2025 first quarter alone.

• 2025 Inflation (Forecast): Around 2.2% - 2.4%.
• Key Cost Drivers: Higher energy costs and increased reliance on imported raw materials.
• Q1 FY2025 Impact: Logistics and labor costs caused a 440 basis point reduction in gross margin.

Currency risk exposure due to US Dollar (USD) sales and Jordanian Dinar (JOD) expenses.

The currency risk exposure is largely mitigated for Jerash Holdings, which is a significant structural advantage. The Jordanian Dinar (JOD) has been officially pegged to the US Dollar since 1995 at a rate of 0.709 JOD per USD (or 1 JOD = 1.41 USD), and this peg is holding firm through 2025.

Since your revenue is predominantly in USD-U.S. sales accounted for 89% of total revenue in Q2 FY2026 (the most recent data available, which reflects the current environment)-and your major costs, like labor, are paid in JOD, a stable exchange rate removes the uncertainty that plagues many other global apparel manufacturers. Jordan's substantial foreign currency reserves, which stood at $22 billion as of March 2025, further anchor this stability.

Global economic slowdown potentially reduces demand from major US retail customers.

The global economic outlook for 2025 suggests a slowdown, with global growth projected to remain at or below 3.2 percent. This moderation in growth, coupled with a depreciating US Dollar Index (DXY) which fell about 4-5 percent year-to-date as of November 2025, can pressure your major US retail customers.

A weaker dollar makes imports slightly more expensive for US buyers, which can lead to reduced order volumes or more aggressive price negotiations. Jerash Holdings is highly concentrated, with major brands like VF Corporation and New Balance making up a significant portion of your sales. For example, in Q2 FY2026, VF Corporation alone accounted for 60% of sales. This concentration means any slowdown or inventory correction by a single major customer can have an outsized impact on your full-year revenue, which you currently project to increase by 20-25 percent for fiscal 2025.

Rising minimum wage in Jordan impacts labor costs, a key operating expense.

Labor cost is a critical operating expense for any apparel manufacturer. While the national minimum wage in Jordan rose from JOD 260.00 to JOD 290.00 per month in January 2025, the garment sector operates under a separate, lower collective labor agreement.

For your sector, the minimum wage increased from JOD 220 to JOD 230 per month starting January 1, 2025. This represents an increase of approximately 4.5 percent. This is a direct, quantifiable increase to your labor costs, but it is less severe than the national hike of 11.5%. You employ approximately 6,000 people, so even a small percentage increase translates to a significant rise in total payroll.

Here is a summary of the minimum wage changes and their direct cost implications:

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Social factors

Focus on Ethical Sourcing and Fair Labor Practices (ESG) from US Buyers is Intense

The intense scrutiny from major US and global apparel buyers on Environmental, Social, and Governance (ESG) factors is a non-negotiable reality for Jerash Holdings. This pressure is driven by consumers, especially Gen Z and Millennials, who demand supply chain transparency and ethical production. For instance, 32% of U.S. shoppers now factor ethical production into their purchasing decisions, a significant minority that major brands cannot ignore.

This intense focus translates into direct risk. In late 2024, Jerash Holdings faced public allegations regarding working conditions for female migrant workers, including claims of extremely long working hours and denial of leave. The immediate response from major customers like New Balance, VF Corporation, and Adidas, who are actively collaborating with the factory to enhance systems, shows how quickly social issues can become a primary business risk. This is not just a compliance issue; it's a core component of maintaining lucrative customer contracts.

Reliance on a Large, Often Foreign, Labor Force Requires Careful Social Management

Jerash Holdings' operational model in Jordan is fundamentally dependent on a large, diverse, and predominantly foreign labor force, which presents unique social management challenges. The company employs approximately 6,000 people across its six factories and four warehouses. The composition of the broader Jordan garment sector workforce shows that migrant workers, primarily from Bangladesh, Sri Lanka, India, Myanmar, and Nepal, account for about three-quarters (75%) of the total workforce, with local Jordanian workers making up the remaining 25%.

This demographic reality requires significant investment in social infrastructure to mitigate risks like wage disputes, poor accommodation, and recruitment fee issues-all common in global apparel supply chains. Jerash Holdings' proactive social initiatives, which are key to its ESG profile, include:

• Building a high-quality, green dormitory for its expanding multinational workforce.
• Operating two child daycare centers to support working parents.
• Partnering with the Jordanian government to hire Syrian refugees with equal pay, a pioneering effort.

One clean one-liner: Managing a multinational workforce is less about compliance and more about retention.

Consumer Preference Shifts Toward Sustainable and Transparent Supply Chains

The shift in US consumer behavior toward sustainability and transparency is moving from a niche trend to a mainstream expectation, directly impacting Jerash Holdings' customers and, by extension, its order book. The ethical fashion market is forecasted to grow at a Compound Annual Growth Rate (CAGR) of 8.1% through 2027, demonstrating sustained momentum.

This shift means customers are increasingly prioritizing 'slow fashion' over 'fast fashion.' For Jerash Holdings, this translates into a need to showcase its certifications and ethical practices to secure orders from brands that are themselves under pressure to prove their supply chain integrity. The following table highlights key consumer preference data as of 2025:

High Employee Turnover Rates in the Apparel Sector Require Constant Recruitment

The apparel manufacturing sector, particularly in low-cost sourcing regions, contends with persistently high employee turnover, a major cost driver due to recruitment and training expenses. While a specific 2025 turnover rate for the Jordanian apparel sector is not public, the broader industrial sector turnover rate in Jordan has been estimated at 20.6% annually, which is substantially higher than the US average for the Manufacturing sector at 2.7%.

Here's the quick math: If Jerash Holdings' 6,000 employee base experienced the industrial-sector-level turnover of 20.6%, the company would need to replace over 1,200 workers each year just to maintain its current headcount. This constant churn is compounded by the fact that migrant workers typically operate on two- to three-year contracts, necessitating a continuous, costly recruitment pipeline from countries like Bangladesh and Nepal. This is defintely a significant operational and financial drain.

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Technological factors

Need for investment in automation to offset rising labor costs

You're operating in an environment where the cost-benefit of manual labor is constantly shifting, even in a low-cost region like Jordan. To maintain a competitive edge and expand capacity, Jerash Holdings (US), Inc. (JRSH) must prioritize production technology investments. The company projected a significant capital expenditure (CapEx) of approximately $8.5 million in the fiscal year ending March 31, 2025, specifically for the 'further enhancement of production capacity.' This spending is a defintely necessary step to drive operational efficiency and manage the long-term pressure of rising wages.

Here's the quick math: automation in areas like automated cutting and specialized sewing machines increases output per employee, directly lowering the unit cost of production. This investment directly supports the 15% increase in production capacity expected to be completed by the second quarter of fiscal 2026. You simply cannot achieve that kind of capacity jump with labor alone.

Adoption of supply chain visibility tools to meet retailer compliance standards

Retailers like VF Corporation demand end-to-end transparency in the supply chain (SCM) to ensure ethical sourcing, quality control, and on-time delivery. Jerash Holdings' reliance on digital integration, while not always explicitly named as a 'visibility tool,' is clear in its financial operations. The company utilizes a supply chain financing program offered by two of its major customers, VF Corporation and New Balance. This program requires a high degree of digital data exchange for inventory, invoices, and shipment tracking to facilitate early payment by the customers' banks.

The need for robust visibility was underscored by the real-world impact of geopolitical instability in the Middle East. Logistics disruptions due to port closures and congestion in FY2024 and FY2025, for example, forced the company to explore alternative shipping routes through Jordan's Aqaba port, bypassing the congested Haifa Port. Better visibility tools would have provided earlier, more granular risk mapping for these events. Shipments deferred due to the Haifa port issues impacted fourth-quarter fiscal 2025 revenue by approximately $3 million to $4 million.

• Leverage existing digital platforms for real-time compliance reporting.
• Use data to model alternative logistics routes, like the Aqaba port.
• Minimize the $3 million to $4 million revenue risk from future port disruptions.

Digital integration with key customers like VF Corporation for demand forecasting

The heavy customer concentration at Jerash Holdings makes deep digital integration for demand forecasting a strategic imperative, not just a convenience. Sales to VF Corporation, which owns brands like The North Face and Timberland, accounted for approximately 60% of total sales in fiscal 2023. This means Jerash's production schedule is highly dependent on VF Corporation's sales forecasts and inventory needs.

The use of the supply chain financing program with VF Corporation is a form of digital integration that allows for better synchronization of production and payment cycles. However, true digital integration goes further, requiring the sharing of real-time sales data (Point of Sale, or POS data) to enable Jerash to shift production capacity quickly. Without this, the risk of over- or under-production rises, directly impacting the fiscal 2025 gross margin of 15.3%. You need to be an extension of their inventory system, not just a vendor.

Cybersecurity risks for protecting proprietary design and customer data

As a manufacturer for high-profile global brands, Jerash Holdings is a prime target for digital supply chain attacks. The company handles proprietary design specifications and sensitive customer order data for brands like The North Face and Timberland. Protecting this intellectual property (IP) is non-negotiable, as a breach could lead to significant financial penalties and the loss of major contracts.

The stakes are enormous; global cybercrime damage costs are projected to reach $10.5 trillion annually in 2025. For a company with a fiscal 2025 revenue of $146 million, a major breach could wipe out years of profit. The current threat landscape is evolving rapidly with AI-driven cyber threats and sophisticated ransomware-as-a-service (RaaS) attacks. You must ensure your security spending is protecting the crown jewels-the customer IP-from these advanced threats. This requires a continuous investment in security protocols that match the standards of its major U.S. customers.

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Legal factors

Compliance with the strict labor laws under the US-Jordan FTA is mandatory.

The US-Jordan Free Trade Agreement (FTA) is the bedrock of Jerash Holdings' business model, but it comes with stringent labor compliance requirements that are under constant scrutiny. This isn't just about local Jordanian law; it's about adhering to international labor standards, a mandate enforced by the US government and major global brands. In late 2024, for example, reports surfaced alleging poor working conditions, including excessively long hours-up to 14 hours a day-and denied leave for some migrant workers at Jerash Holdings' facilities.

This is a high-stakes compliance area. The company is a mandatory member of the International Labour Organization's (ILO) Better Work Program, which covers an estimated 95% of all garment workers in Jordan's export sector. Still, the sector faces structural challenges. The minimum monthly wage for garment sector workers has been stuck at JD 220 since 2017, which translates to a cash component of only JD 125 for migrant workers, with the remainder being in-kind benefits like housing. To be defintely clear, the general national minimum wage for other sectors is higher, at JD 260 (US$ 367) per month as of January 1, 2023. This wage disparity and the need to manage complex labor practices for a workforce of approximately 6,000 people across six facilities is a constant legal and reputational risk.

Adherence to US customs regulations and rules of origin for duty-free status.

Jerash Holdings' competitive advantage in the US market hinges entirely on maintaining its duty-free status under the US-Jordan FTA. Without this, the cost structure changes overnight, as apparel classified under HTS chapters 61 and 62 would revert to effective tariff rates that previously ranged from 8.2% to 9.7%. The core legal requirement here is the Rule of Origin (ROO).

To qualify for the preferential tariff treatment, the exported goods must be considered 'originating' under the FTA.

• The value of materials produced in Jordan, plus the direct costs of processing operations performed there, must be at least 35% of the product's appraised value.
• Up to 15% of this 35% requirement can be met by the cost or value of US-origin materials.

Here's the quick math: If a product is appraised at $100, at least $35 of that value must be added in Jordan or be US-origin content. Any failure to document this local value-add precisely can lead to US Customs and Border Protection (CBP) denying the duty-free claim and imposing the full tariff, which would severely impact margins. A significant, near-term risk is the US government's announcement in April 2025 of potential 'global reciprocal tariffs,' which could impose a 20% tariff on Jordanian exports, threatening the entire duty-free framework.

Environmental regulations in Jordan regarding water usage and waste disposal are tightening.

Jordan's extreme water scarcity is forcing a rapid tightening of environmental law, especially for water-intensive industries like textiles. With only 90 cubic meters of water available per person annually, the government is strictly enforcing usage and pushing a transition to a circular economy, which is a major legal and operational pivot for all manufacturers.

The National Green Economy Action Plan (2021-2025) and the National Water Strategy (2023-2040) are the key regulatory drivers. Jerash Holdings must align its operations with these national priorities, which means capital expenditure on water and waste infrastructure is no longer optional.

The industrial sector's water consumption is under intense scrutiny. Investing in water reuse and recycling technologies is the clear action to mitigate the legal and financial risks of non-compliance.

International intellectual property (IP) laws protect designs and brand partnerships.

As a manufacturer for major global brands, Jerash Holdings' legal exposure to intellectual property (IP) law is significant. The US-Jordan FTA explicitly requires Jordan to maintain strong protection and enforcement of copyrights, trademarks, patents, and trade secrets. This legal framework is essential because the company handles proprietary designs and branded materials for its customers.

Any breach of IP-whether through design leakage, unauthorized production, or the use of counterfeit materials-would not only violate Jordanian and international law but would also immediately terminate high-value brand partnerships. The company's legal team must maintain an iron-clad IP compliance program, especially given the high volume of production, which is over 14 million pieces annually. The IP protection is the silent insurance policy for maintaining client trust and the supply chain's integrity.

Jerash Holdings (US), Inc. (JRSH) - PESTLE Analysis: Environmental factors

You're operating a high-volume manufacturing business in Jordan, one of the world's most water-stressed regions, so environmental factors directly translate into operational cost and supply chain risk. The near-term focus must be on water conservation and energy efficiency, as your customers-like VF Corporation and New Balance-are increasingly scrutinizing Scope 3 (supply chain) emissions and resource use.

To be fair, the company is defintely positioned well to capture the supply chain diversification trend. Still, Finance needs to draft a 13-week cash view by Friday, specifically modeling a 10% increase in raw material costs and a 5% drop in order volume to stress-test the current financial reality of a fiscal year 2025 net loss of $840,000.

High water consumption in textile dyeing and finishing is a significant concern in arid Jordan.

Water scarcity in Jordan is an extreme, non-negotiable risk. The country has only about 61 cubic meters of renewable fresh water available per capita per year, which is far below the international absolute scarcity line of 500 cubic meters. This makes any industrial water use a political and environmental flashpoint.

While Jerash Holdings (US), Inc. primarily focuses on cut-and-sew operations, which are less water-intensive than dyeing, the pressure from global brands remains high. The apparel industry is notorious for its water footprint; producing just one cotton T-shirt globally requires approximately 2,700 liters of water. The company is mitigating this risk by using recycled water for exterior landscaping at its new dormitory and is actively examining opportunities for wastewater recycling in its production processes, which is a smart move to future-proof operations in this arid region.

Pressure to switch to sustainable materials and reduce carbon footprint per unit.

The global shift toward Scope 3 emissions accountability means your clients are pushing sustainability mandates down the supply chain. Jerash Holdings (US), Inc. has taken concrete steps to reduce its direct energy footprint, which is a key component of Scope 1 and 2 emissions (direct and purchased energy). They installed solar panels at all facilities, which is projected to save 45% in energy usage and costs.

This initiative, plus the conversion to natural gas from diesel for heating, is a strong signal to brand customers. However, the next step must be to quantify the carbon footprint per garment (carbon intensity) and increase the use of sustainable materials (like organic cotton or recycled polyester) to meet the growing demand from clients like VF Corporation and New Balance. The global average water footprint for textile products is a staggering 17,000 liters per kilogram of textile, highlighting the need for material-level change.

Waste management and disposal of textile scraps require compliant, costly solutions.

Textile waste from cutting and sewing is a growing problem in Jordan. For context, garment manufacturers in just the Al-Hassan Industrial Estate generated approximately 35,000 tons of textile waste in 2021, with 70% of that being fabric scraps. Landfilling this volume is not a sustainable long-term option, and it creates a compliance risk under Jordan's Waste Management Framework Law No. 16 of 2020.

The government is working with the European Union and the French Development Agency to finalize a comprehensive textile waste management plan by June 2025. This will likely lead to stricter regulations and higher disposal costs for manufacturers. Jerash Holdings (US), Inc. is ahead of the curve by using high-quality, environmentally friendly inks in screen printing, but they need a clear, costed plan for recycling the fabric scraps, potentially through a public-private partnership (PPP) model, to avoid future compliance penalties.

• Quantify scrap waste in metric tons.
• Identify local or regional textile recycling partners.
• Model the cost of a compliant waste stream.

Climate change impacts (e.g., extreme heat) affect factory working conditions and energy use.

Extreme heat events are becoming more frequent in the Middle East, directly impacting worker productivity and increasing the need for cooling, which drives up energy costs. The company's move to install solar panels, saving 45% on energy costs, and converting to energy-efficient LED lighting, provides a significant hedge against rising electricity prices driven by climate-related cooling demand.

This table summarizes the core environmental risks and the company's fiscal year 2025 performance data, showing the intersection of environmental pressure and financial results:

The energy savings are a direct financial offset to climate-related operational risks. Still, the company must also focus on worker comfort and safety during heatwaves, as a stable workforce of approximately 6,000 employees is a primary competitive advantage.