Impact of US Tariffs on India’s Textile Sector: Challenges and Opportunities
US President Donald Trump announced a 27% tariff on India’s textiles, citing unfair trade practices. India is relatively less affected than regional competitors like Vietnam and Bangladesh. Experts have mixed sentiments, suggesting that while tariffs present challenges, they may also provide India with a competitive edge in the US market. The ongoing trade negotiations could further shape the impact on India’s textile sector.
The announcement of heavy tariffs by US President Donald Trump on India’s textiles sector has raised questions about its potential impact. Initially set at 26 percent, the tariff was later corrected to 27 percent. Trump emphasized that India has not reciprocated fairly, proposing tariffs that are less than half of India’s rate of 52 percent. An official from India’s commerce ministry remarked that the tariffs are a mixed bag rather than a significant setback.
Importantly, India is less impacted than its regional competitors. For instance, Vietnam faces tariffs as high as 46 percent, Sri Lanka at 44 percent, while Bangladesh and China are at 37 percent and 34 percent, respectively. The new tariffs highlight India’s position in comparison, with its textiles exports valued at $9.7 billion, representing an eight percent share of the US market. In contrast, China dominates at a 30 percent share with imports worth $36 billion.
Industry experts express divergent views on the situation. Shiraz Askari emphasizes the challenge posed by the new tariffs, noting that they can significantly affect business profitability, especially in a thin-margin sector. He advocates for enhancing efficiency and diversifying markets. Conversely, Prabhu Dhamodharan suggests that with higher taxes on competitor nations, India could gain a tariff advantage, potentially increasing its competitiveness in the US apparel market.
Furthermore, some industry leaders propose strategies to mitigate the impact. The Apparel Export Promotion Council has urged for a reduction of tariffs on textiles to zero, which could be mutually beneficial. K Venkatachalam remarked about the potential for significant market share growth if India were to eliminate import duties on cotton.
The bilateral trade negotiations with the US could further influence the textile sector. Gautam Khattar notes the potential for exemptions to mitigate tariff impacts during these discussions, although he cautioned about ensuring that India’s trade agreement with the US remains robust. The commerce ministry is currently assessing the tariff impacts and exploring options for dialogue with the US administration, which may allow for reductions should India address US concerns.
In summary, while India’s textile sector faces new challenges due to increased tariffs, the situation also presents opportunities amid stronger competition for other nations. The disparity in tariffs may allow India to enhance its competitiveness in the US market. Importantly, strategic planning and trade negotiations could serve as levers to mitigate any adverse effects, leading to potential growth in market share and investment.
Original Source: www.firstpost.com
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