 "Workers at a manufacturing unit in Tiruppur Source: Premier Agencies")
Export-focused textile and apparel manufacturers in Tiruppur, Noida, and Surat have suspended production, fearing further erosion of cost competitiveness in the United States market due to the 50 per cent additional tariff, the Federation of Indian Export Organisations (FIEO) said on Tuesday.
US duties on Indian products are scheduled to rise to 50 per cent from 27 August. The move will seriously disrupt the flow of Indian goods to its largest export destination, FIEO President SC Ralhan stated.
Indian exporters losing ground to Vietnam, Bangladesh
According to the traders’ body, Indian textile units are ceding ground to lower-cost competitors in Vietnam and Bangladesh. The organisation urged the government to introduce support measures to maintain momentum in the labour-intensive export sector.
Ralhan observed that India’s exports to the US will face significant setbacks, with about 55 per cent of shipments exposed to a pricing disadvantage of 30–35 per cent, leaving them uncompetitive against rivals from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries.
He added that seafood exporters are particularly vulnerable, with the tariff hike threatening stockpile losses, supply chain disruptions, and distress among farmers.
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US duty hike threatens Indian textile exports
Nearly one-third of India’s $37 billion textile and apparel exports are directed to the US. “The recent US duty hike has put ₹72,000 crore of Indian textile & apparel exports at risk, creating a 30–31 per cent duty gap against competing nations,” said Prabhu D, convenor of the Coimbatore-based Indian Texpreneurs Federation (ITF).
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Prabhu said exporters had invested heavily in capacity expansion over the past two to three years to take advantage of the China Plus One strategy and attract more US buyers, adding that those investments and jobs were now at risk.
Call for diplomatic engagement
“However, leveraging the negotiating window for urgent diplomatic engagement with the US still remains the key. Yet another approach could be the promotion of Brand India and innovation through enhanced global branding, investment in quality certifications, and embedding innovation in export strategy to make Indian goods more attractive globally,” Ralhan said.
Among different product categories, India’s competitors include Myanmar (40 per cent US tariff), Thailand (19 per cent), Cambodia (19 per cent), Bangladesh (20 per cent), Indonesia (19 per cent), China and Sri Lanka (both 30 per cent), Malaysia (19 per cent), the Philippines (19 per cent) and Vietnam (20 per cent).
Competitiveness eroded
For other labour-intensive exports such as leather, ceramics, chemicals, handicrafts and carpets, competitiveness is sharply eroded, particularly against European and Mexican producers, Ralhan cautioned. He highlighted the risks of delays, order cancellations, and the loss of cost advantages in these sectors.
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Exporters emphasised that trade agreements with the European Union (EU), Oman, Chile, Peru, Africa, and Latin American countries should be prioritised, with early-harvest provisions for labour-intensive sectors. Nevertheless, urgent diplomatic engagement with the US remains essential, they said.
Industry seeks easy access to finance
The FIEO chief underscored the need for immediate government backing, including interest subvention schemes and export credit support to preserve working capital and liquidity. He stressed that low-cost credit and easy access to finance, particularly for MSMEs, must be ensured with support from banks and financial institutions under directives from both the Centre and the Reserve Bank of India.
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