India-US deal uncertainty puts over $2-bn apparel orders, jobs at risk, Pg13

Key Highlights:

• Negotiations between Indian apparel manufacturers and US importers for summer orders worth approximately $2 billion have stalled due to uncertainty surrounding the India-US trade deal.
• Without a trade deal, orders may shift to countries like Bangladesh, Vietnam, and China, which face lower tariffs than the potential 50% tariff on Indian goods.
• Tiruppur, a major textile hub, anticipates a loss of nearly Rs 7,000 crore if summer orders are missed, impacting local employment.
• In 2024, India exported $10.3 billion of textiles and apparel to the US, representing 8.21% of India’s world exports in 2023-24.

Detailed Insights:

• The potential imposition of a 50% tariff could lead to a $6.6 billion decrease in US import demand for Indian textiles and apparel, with the most significant impact on fiber, yarn, and fabrics.
• A reduced tariff of 25% could still result in a $2.1 billion negative impact, primarily affecting made-ups and apparel product groups.
• The apparel and textiles supply chain is largely domestic, with approximately 90% of inputs sourced within India, highlighting the sector's labor-intensive nature.
• The uncertainty surrounding tariffs has caused a pause in fresh order negotiations and has led some workers in textile hubs like Tiruppur to remain unemployed.
• Some manufacturers are shifting focus to e-commerce exports and the domestic market to mitigate the impact of reduced US orders.

Key Concepts Involved:

• Tariff: A tax or duty imposed on goods when they are moved across a political boundary.
• Trade Deal: A formal agreement between countries to reduce barriers to trade.
• Export Promotion: Government policies and programs designed to encourage exports.