US Tariffs To Hit Nearly Quarter Of India's Textile Exports In Next 6 Months: Experts
As the 50 per cent tariffs imposed by the US come into effect, close to one-fourth of India's textile exports may be severely impacted in the next 6 months.
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Indian government has extended duty-free cotton imports by an additional 3 months. (File)
New Delhi:
With the implementation of 50 per cent tariffs by the United States, experts warned on Thursday that approximately one-quarter of India's textile exports could face severe consequences over the next 6 months. The US represents the largest export market for India's apparel sector, and exporters are currently dealing with order cancellations as a result of these new tariffs.
On a positive note, the extension of duty-free cotton imports until December 31 is anticipated to provide some relief to India's textile industry. The sector is now working to adjust its export strategy by exploring alternative markets beyond the US, leveraging India's existing free trade agreements (FTAs) to counteract the impact of these steep tariffs.
"For the next six months, we anticipate a decline of approximately 20-25 per cent, assuming some degree of market reorientation takes place. Without such adjustments, the affected exports would represent 28 per cent, primarily in apparel and made-ups," Confederation of Indian Textile Industry (CITI) Secretary General Chandrima Chatterjee informed PTI.
The government announced on Thursday an extension of duty-free cotton imports for three additional months until December 31, aiming to support textile exporters facing the substantial 50 per cent tariffs in the US market. Previously, on August 18, the Finance Ministry had granted duty exemption on cotton imports from August 19 through September 30.
"We are greatly relieved by this extension because the earlier exemption period was insufficient for benefiting new cotton orders, which typically require 45-50 days minimum for shipping. This extended window will now accommodate new orders," Chatterjee explained.
She highlighted that the cotton import duty exemption would enhance cost competitiveness by reducing price differentials.
"Prior to these exemptions, domestic cotton prices exceeded the international benchmark by 10-15 per cent, an issue that will now be addressed," the CITI secretary general noted.
In correspondence with Prime Minister Narendra Modi, Apparel Export Promotion Council (AEPC) Chairman Sudhir Sekhri expressed significant concern regarding the 50 per cent reciprocal tariff imposed by the US on Indian imports, emphasizing its impact on India's textile and apparel industry.
"The United States represents one of our largest export destinations, and such substantial tariffs will dramatically reduce the competitiveness of Indian products in the American market, negatively affecting both exporters and consumers," Sekhri stated.
Nevertheless, he pledged full support for the government's position on protecting Indian farmers, the dairy industry, and fishermen.
"Our industry is already experiencing the consequences of these tariff increases, including potential financial losses and order cancellations. We are actively seeking alternative markets and developing strategies to minimize the impact of US tariffs. We are engaged in ongoing discussions with both the Ministry of Textiles and the Ministry of Commerce & Industry. During our meetings with ministers from both departments, we have received assurances of their maximum possible support," Sekhri added.
For the fiscal year 2024-25, the overall textile and apparel sector is estimated to be worth USD 179 billion, comprising a domestic market of USD 142 billion and exports valued at USD 37 billion.