Textile exporters flag risk to jobs, market loss from US tariffs, Pg23

Key Highlights:

• Indian apparel exporters warn that sustained US tariffs could cause permanent market share damage and job losses.
• Tiruppur textile cluster in Tamil Nadu, which exports nearly Rs 14,000 crore worth of garments annually to the US, is the hardest hit.
• The Apparel Export Promotion Council (AEPC) has requested government support due to disruptions caused by US tariffs.
• India exported $10.3 billion of textiles and apparel to the US in 2024, representing 8.21% of India’s world exports in 2023-24.

Detailed Insights:

• The imposition of 25% tariffs and an additional 25% oil-related penalty by the US is causing severe disruption to India's textile exports.
• US buyers are withholding or cancelling new orders due to the risk of mid-cycle tariff escalation, making further tariff absorption commercially impossible.
• Market diversification is not a short-term solution, as textile sourcing is embedded in long-term buyer supply chains requiring 2-3 years for alternate market development.
• Loss of the US market could lead to permanent customer displacement, benefiting competitors like Bangladesh, Vietnam, and China with preferential access.
• Negotiations between Indian apparel manufacturers and US importers have stalled, leading to orders moving to competitors with lower tariffs.
• The Indian government has taken steps to aid the sector by easing duty on key raw materials like cotton and addressing MSMEs’ access to input material.
• About 90% of the inputs for apparel and textiles are sourced domestically, highlighting the labor-intensive nature and domestic reliance of the sector.

Key Concepts Involved:

• Tariffs: Taxes imposed on imported or exported goods.
• Market Diversification: Strategy to expand into new markets to reduce reliance on a single market.
• MSMEs: Micro, Small, and Medium Enterprises, vital for economic growth and employment.