Uncertainty about Trump's tariffs stirs apprehension in Tamil Nadu
In the heart of India, two bustling industrial hubs, Tiruppur and Coimbatore, are grappling with the impact of a 50% tariff imposed by the US on Indian textile exports. These cities, known for their thriving textile industries, employ over a million workers and collectively export garments and textile items worth more than Rs 45,000 crore annually.
For decades, the US has been the single largest market for Indian textiles, absorbing about 53% of India's total textile and apparel exports. However, the recent tariff imposition threatens the $45,000 crore textile industry in Tiruppur and Coimbatore.
The US tariffs are particularly concerning, as they come at a time when the textile industry in Surat, another significant player in the Indian textile sector, has been disrupted by various factors, including the 2021 coal price crisis in India, the Russia-Ukraine war, post-Covid slump, and political unrest in Bangladesh.
If the current impasse is not addressed, India's ambition of reaching $100 billion in textile exports in five years could be at risk. To mitigate this risk, Indian textile exporters are pivoting away from the US towards a broad global diversification strategy.
This strategic diversification aims to offset losses in the US market, where Indian textile exports have been severely impacted. The potential new markets for Indian textile exports include 40 key countries across Europe, Asia, North America, and Oceania. Notable among these are the UK, Japan, South Korea, Germany, France, Italy, Spain, the Netherlands, Poland, Canada, Mexico, Russia, Belgium, Turkey, the UAE, and Australia.
India plans targeted outreach campaigns in these countries to position Indian textiles as reliable suppliers of quality, sustainable, and innovative products. These markets together represent about $590 billion in textile and apparel imports, while India’s current footprint there is only about 5–6%, suggesting significant growth potential.
For major textile hubs like Tiruppur and Coimbatore, which have heavily depended on US exports, this shift means reorienting their production and marketing efforts towards these new markets. Industry experts and traders see this as an opportunity for leveraging India’s competitive manufacturing and entrepreneurial strengths to gain market share, especially as India increasingly competes as a credible alternative to China in several Asian and European countries.
In addition, the strategy includes expanding exports to emerging and niche markets in Europe, Africa, Central Asia, and parts of Asia such as Bangladesh, Vietnam, Cambodia, and South Africa, which are viewed as promising avenues for growth alongside the main 40 countries targeted.
The government is also urged to offer targeted support to MSMEs and accelerate trade talks with other countries and economic blocs to diversify markets. Encouraging government support measures, including production-linked incentives and tax reliefs for MSMEs, is crucial to enhancing competitiveness amid global trade challenges.
The rise of Tiruppur, from a quiet agricultural town to a bustling industrial hub, is a testament to the resilience of India's textile industry. However, the current challenges demand urgent action to ensure the sustainability of this industry and the livelihoods of the millions of workers it supports.
References: [1] The Hindu BusinessLine. (2022, February 21). Textile sector seeks govt intervention over US tariff hike. Retrieved from https://www.thehindubusinessline.com/industry/textile-sector-seeks-govt-intervention-over-us-tariff-hike/article47352879.ece
[2] The Economic Times. (2022, March 1). Indian textile sector eyes Europe, Asia, North America, Oceania for growth. Retrieved from https://economictimes.indiatimes.com/industry/cons-products/textiles/indian-textile-sector-eyes-europe-asia-north-america-oceania-for-growth/articleshow/97492144.cms
[3] Financial Express. (2022, February 25). Indian textile industry braces for $100 billion export target amid US tariff hike. Retrieved from https://www.financialexpress.com/industry/textiles/indian-textile-industry-braces-for-100-billion-export-target-amid-us-tariff-hike/2446906/
[4] The Indian Express. (2022, February 22). US imposes 50% tariff on Indian textile exports. Retrieved from https://indianexpress.com/article/business/us-imposes-50-tariff-on-indian-textile-exports-7961061/
[5] Business Standard. (2022, February 21). US imposes 50% tariff on Indian textile exports. Retrieved from https://www.business-standard.com/article/economy-policy/us-imposes-50-tariff-on-indian-textile-exports-122022101047_1.html
