Trump’s 50% tariffs on Indian goods have upset the country’s US$11bil textile export industry and shaken confidence in the US market. — AFP
MUMBAI: When Donald Trump was elected, Indian garment exporter R K Sivasubramaniam thought the new US president would boost business and invested heavily in anticipation of a boom.
But less than a year later, everything is “upside down” in the southern state of Tamil Nadu, he admitted with a pained smile.
Trump’s 50% tariffs on Indian goods, imposed in August, have upset the country’s US$11bil textile export industry and shaken confidence in the US market.
Sivasubramaniam’s Raft Garments factory in southern India, normally frenetic with humming sewing machines, is quieter and work hours have been cut, hitting employees’ paypackets.
If his US buyers turn to other suppliers, half his business could vanish.
Meanwhile, half a million garments sit in towering stacks, ready for shipment, but stalled over who will pay the new duties.
Buyers are asking for a 16% to 20% discount.
“We cannot give that much,” said Sivasubramaniam, whose desk carries crossed US and Indian flags. “It’s a very huge loss for us.”
If Raft doesn’t shoulder part of the duties, it won’t be paid for garments already produced, leaving it unable to cover costs.
“If it continues for another month, we cannot give work to our employees,” he warned.
Trump’s anger at India’s purchases of Russian oil, which Washington said help finance Moscow’s war in Ukraine, has left New Delhi facing some of the world’s steepest tariffs.
A trade deal that could ease that hinges partly on progress in peace talks.
But the fallout is being felt in Tiruppur.
Dubbed India’s “knitwear capital”, and “Dollar City” for its export earnings, the small industrial town produced US$5bil in garments the last fiscal year, 40% going to the United States.
Its lanes are dotted with thousands of units including dyeing, embroidery and sewing workshops.
Manufacturers paint a grim picture.
“US orders have largely stopped, around 80% of the US business has reduced,” said Ramesh Jebaraj of Trinity Tex.
In the same season last year, he produced 100,000 garments.
Now, he has barely 20% of that, forcing him to seek buyers in Israel and the United Arab Emirates.
“This is the situation across Tiruppur,” he said. “Some of the bigger factories are on the verge of closing some of their units.”
Alexander John of NC John Garments, which supplies Walt Disney, called the tariff standoff “the worst possible situation any business can be in”.
With his US orders “completely at a standstill”, he has cut shifts and laid off workers.
To stay afloat, he is looking to Europe and Britain, but said “none of these markets can replace the United States”.
Tamil Nadu Chief Minister M K Stalin has warned that up to three million jobs could be at risk across the state’s textile belt, a grim prospect for a country struggling to provide well-paid work for its youth.
Local industry associations said they have so far avoided widespread layoffs by agreeing to steep discounts on US shipments. — AFP
