US Tariffs To Impact India's Textile Exporters In A Big Way, Say Experts

US President Donald Trump's announcement regarding the imposition of 25 per cent additional import duty plus penalty on goods imported from India will hit the country's textile exporters in a big way, as competitors, including Vietnam and Indonesia now have a pricing edge by virtue of lower tariffs, experts said on Thursday.

The duty will come into effect from August 1. The unspecified penalty was imposed on India for purchasing crude oil and military equipment from Russia.

The US is India's largest market for textile and apparel exports.

According to trade intelligence firm Cybex Exim Solutions, many Indian exporters may face order cancellations and the pressure to reduce prices, with costs going up and competitive disadvantage from Vietnam and Indonesia.

"The 25 per cent tariff announced by the US is a big hit for India's textile and garment exporters. Out of the USD 17 billion we export in ready-made garments, USD 5.6 billion goes just to the US. That's a big chunk. With costs going up overnight, many exporters might face order cancellations or pressure to reduce prices. Countries like Vietnam and Indonesia now have a pricing edge because their tariffs are lower," Cybex Exim Solutions stated.

"While India is still ahead of Bangladesh and Cambodia in terms of quality, this move puts real pressure on our manufacturers, especially smaller ones. It is time we look beyond just the US and start tapping into other markets more aggressively," it added.

Speaking to PTI, Secretary General of the Confederation of Indian Textile Industry (CITI) Chandrima Chatterjee said it was "extremely concerned" about the unspecified penalty, as it has caused a lack of clarity for those placing an export order which needs to be serviced in the next couple of months.

"We will be seriously impacted. While most of us have taken the 25 per cent tariff with a pinch of salt but the penalty is where we are extremely concerned because we still are in a very speculative space there," Chatterjee said.

According to her, Vietnam has a lower tariff than India at 20 per cent, whereas Indonesia faces a 19 per cent import tariff from the United States.

Indian exporters could look at tapping alternative markets like the UK, EU, UAE, Japan and Korea more aggressively, Chatterjee added.

Rajeev Gupta, Joint Managing Director, RSWM Ltd, said a "more pressing concern is the undefined penalty clause linked to India's ties with Russia, which adds a layer of uncertainty".

"Indian entrepreneurs and manufacturers are resilient, and we are confident that business momentum will be consistently rising with planned strategies. What remains crucial is clarity on the tariff position against China," Gupta stated. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)