This Thursday saw textile stocks in India trading lower, an aftermath of the additional 25% US tariffs imposed recently. The export-centric industries have been the worst affected with KPR Mill, Trident, Welspun Living, Pearl Global Industries seeing decline of 3% each.
The fresh tariffs came into effect after the US President signed an executive order imposing 25% additional duty on Indian imports. Thus the tariffs on several key categories including textiles and apparel have been raised to 50% from 27th August.
India’s competitiveness is now under threat as the US is its largest export destination for textiles. After China and Vietnam, India ranked as the third largest supplier. But at present, duties on Japan, China, Vietnam and Indonesia stand significantly lower at 15%, 30%, 20% and 19% respectively. This big gap could lead to shifting of orders to our competitors, further growing pressure on the textile industry, as per analysts.
The textile industry has been hit very hard, with duties on knitted apparel reaching 63.9% and that of woven reaching 60.3%. Experts also caution about India’s textile and apparel exports to the US reducing by 40-50%, giving a huge blow to the US $ 10.3 billion export market.
Federation of Indian Export Organisations (FIEO) states that about 55% of India’s shipment to the US will be directly impacted, creating a sharp competitive disadvantage for the domestic exporters.
Director of Ya Wealth, Anil Gupta says that the market is expecting a deferral in Trump’s 50% tariffs on India, as the US GDP is expected to be hit by 50 bps, which is almost double the hit that Indian GDP will face because of this move by the Trump administration.
