tn-export-firms-to-gauge-tariff-effect-before-resuming-production

The US administration’s decision to hike tariff on India’s imports to 50 per cent has cast a pall of uncertainty on most sectors, as they adopt a wait-and-watch approach to gauge the effects of tariffs.

Tiruppur, known as the ‘knitwear hub’ of India, exports garments worth ₹45,000 crore annually, of which 12,000 crore constitute to the American market.

However, the manufacturers here fear at least 50 per cent of their export business to be impacted by the tariffs, forcing many of them to halt production and several others to put execution of orders on hold as they evaluate their options.

“Total exports made (from the Tiruppur region) is about ₹45,000 crore, of which 30 per cent (₹12,000 crore) is to the US market. We expect 50 per cent business, which is about ₹6,000 crore to be impacted,” said K M Subramanian, President, Tiruppur Exporters’ Association.

 

Also Read: Tariff fallout: Auto body says time to diversify

Besides halting production for at least the next two weeks, Subramaniam said orders which had already been received have also been put on hold.

Another association official said they feared the worst for exporters making standalone shipments to the United States.
"Exporters making standalone shipments to the United States will be facing severe hardship due to imposition of tariff. We will wait for the next couple of weeks. After that, we will convey our position to the central and state governments," he informed.

The exporters here have now set their eyes on India’s free trade agreement with the UK, which was recently concluded.
“There is a good chance for us to explore the UK market also," the official added, saying the expected loss of ₹6,000 crore from loss of US exports could be offset by shifting exports to other countries.

“We expect that a shift to other countries may happen (in the future)," he added.

On August 6, US President Donald Trump announced an additional 25 per cent tariff on all Indian imports, besides the existing 25 per cent duty, taking the total duty to 50 per cent, effective August 27. 

The initial 25 per cent tariff was effective from August 7, threatening critical sectors like textiles, chemicals, dairy, leather and footwear.

The White House said the measure was in response to India’s continued purchase of Russian oil.