As the festive season preparations kick off in India, the mood across its largest garment export hubs is decidedly bleak. The implementation of a 50% tariff by US President Donald Trump has thrown the industry into disarray, leading to halted orders and intense negotiations.
According to an August 28 ToI report, exporters are grappling with the challenge of absorbing additional costs, a situation that could have dire consequences for employment in an already vulnerable sector.
Gurgaon and Noida, home to some of India’s leading garment exporters, are now in a state of flux. The region makes products for a plethora of well-known brands, including Target, GAP, Tommy Hilfiger, Ralph Lauren, Macy’s, Zara, and Walmart.
As the sixth-largest exporter of textiles and apparel globally, India has built a robust market, shipping textiles worth $34.4 billion in 2023-24. However, the new tariffs—linked to India’s purchase of Russian oil—are a significant setback, particularly as nearly half of India's textile and apparel exports target the US and European Union markets, ToI's report (by Bagish Jha) said.
Industry insiders have voiced their concerns. Ramandeep Singh from Boutique International told ToI of potential closures and job losses. He revealed that buyers are now pressuring exporters to absorb 20-30% of the additional costs, which is unsustainable in the long run.
If this trend continues, firms reliant on US markets, which account for a substantial portion of their business, could find themselves in a precarious position. As competitors like Bangladesh and Vietnam enjoy lower tariffs capped at 20%, the pressure on Indian exporters intensifies.
Visharad Gautam, a member of the Indian Industries Association, told the newspaper that while previous orders had been shipped before the tariffs took effect, the immediate impact is being felt in raw material bookings. A slowdown in bookings may soon translate into production halts, jeopardising the livelihoods of many in this labour-intensive industry.
Textiles contribute significantly to the national economy, accounting for 2.3% of India's GDP, 12% of exports, and 13% of industrial output.
Concerns are mounting as industry representatives, like Arvind Rai from Modelama Export, express frustration over the lack of governmental clarity and support. The fear is that by the time the government takes action, it might already be too late for many businesses.
In this grim scenario, some exporters are holding onto hope. Despite the challenges, there are margins that larger companies can leverage to offer steep discounts, potentially retaining US clients while sacrificing profitability.
Gautam remains cautiously optimistic, suggesting that the current disruptions might be temporary. India’s strategic role in the global supply chain cannot be overlooked. Instances of increased orders during political unrest in Bangladesh highlight India’s importance as a supplier. However, the immediate priorities remain daunting.
The urgency of the situation has not gone unnoticed. Vikash Gupta from the Manesar Industry Welfare Association reported an influx of calls from buyers requesting discounts, indicating the seriousness of the market's predicament. He described his business as being “on a ventilator,” underscoring the precarious nature of the current climate.
The potential fallout extends beyond just businesses; it could significantly impact workers. Satvir Singh, vice-president of CITU Haryana, called for immediate government action to protect jobs. He warned that if layoffs become widespread, it could lead to protests akin to the farmers' agitation, reflecting the deep-seated frustrations of workers facing uncertainty.
According to an August 28 ToI report, exporters are grappling with the challenge of absorbing additional costs, a situation that could have dire consequences for employment in an already vulnerable sector.
Gurgaon and Noida, home to some of India’s leading garment exporters, are now in a state of flux. The region makes products for a plethora of well-known brands, including Target, GAP, Tommy Hilfiger, Ralph Lauren, Macy’s, Zara, and Walmart.
As the sixth-largest exporter of textiles and apparel globally, India has built a robust market, shipping textiles worth $34.4 billion in 2023-24. However, the new tariffs—linked to India’s purchase of Russian oil—are a significant setback, particularly as nearly half of India's textile and apparel exports target the US and European Union markets, ToI's report (by Bagish Jha) said.
Industry insiders have voiced their concerns. Ramandeep Singh from Boutique International told ToI of potential closures and job losses. He revealed that buyers are now pressuring exporters to absorb 20-30% of the additional costs, which is unsustainable in the long run.
If this trend continues, firms reliant on US markets, which account for a substantial portion of their business, could find themselves in a precarious position. As competitors like Bangladesh and Vietnam enjoy lower tariffs capped at 20%, the pressure on Indian exporters intensifies.
Visharad Gautam, a member of the Indian Industries Association, told the newspaper that while previous orders had been shipped before the tariffs took effect, the immediate impact is being felt in raw material bookings. A slowdown in bookings may soon translate into production halts, jeopardising the livelihoods of many in this labour-intensive industry.
Textiles contribute significantly to the national economy, accounting for 2.3% of India's GDP, 12% of exports, and 13% of industrial output.
Concerns are mounting as industry representatives, like Arvind Rai from Modelama Export, express frustration over the lack of governmental clarity and support. The fear is that by the time the government takes action, it might already be too late for many businesses.
In this grim scenario, some exporters are holding onto hope. Despite the challenges, there are margins that larger companies can leverage to offer steep discounts, potentially retaining US clients while sacrificing profitability.
Gautam remains cautiously optimistic, suggesting that the current disruptions might be temporary. India’s strategic role in the global supply chain cannot be overlooked. Instances of increased orders during political unrest in Bangladesh highlight India’s importance as a supplier. However, the immediate priorities remain daunting.
The urgency of the situation has not gone unnoticed. Vikash Gupta from the Manesar Industry Welfare Association reported an influx of calls from buyers requesting discounts, indicating the seriousness of the market's predicament. He described his business as being “on a ventilator,” underscoring the precarious nature of the current climate.
The potential fallout extends beyond just businesses; it could significantly impact workers. Satvir Singh, vice-president of CITU Haryana, called for immediate government action to protect jobs. He warned that if layoffs become widespread, it could lead to protests akin to the farmers' agitation, reflecting the deep-seated frustrations of workers facing uncertainty.
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