US President Donald Trump’s decision to impose a 25 per cent additional import duty along with a penalty on Indian goods, effective August 1, is expected to significantly impact India’s textile and apparel industry. The penalty has been linked to India’s purchase of crude oil and military equipment from Russia, adding another layer of uncertainty for exporters.
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The US is India’s largest market for textile and apparel exports, and experts warn the move could lead to order cancellations and intense pricing pressures.
Vietnam, Indonesia Gain Pricing Edge
According to trade intelligence firm Cybex Exim Solutions, Indian exporters could lose competitiveness to rivals such as Vietnam and Indonesia, which enjoy lower tariff rates.
“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.
Uncertainty Around Penalty Clause
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,
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