India’s major export sectors are reeling after the United States imposed steep tariffs, with rates up to 50%, on a wide range of Indian exports, including garments, gems, jewellery, and seafood. Announced last month and effective from this week, these tariffs are disrupting supply chains, threatening millions of jobs, and putting the country’s trade relationship with its largest partner under severe strain.
- Sharp Decline in Garment Exports Hits Tiruppur’s Textile Hub
- Gems and Jewellery Industry Faces Renewed Challenges
- Shrimp Exporters Brace for Economic Shock and Uncertainty
- Trade Experts Warn of Long-Term Impacts and Need for Diversification
- Broader Economic and Social Consequences
- Outlook: Navigating a Complex Geopolitical and Economic Terrain
Sharp Decline in Garment Exports Hits Tiruppur’s Textile Hub
Tiruppur, often described as the textile capital of India, exemplifies the growing economic distress. Home to more than 200 garment manufacturing units, the city accounts for about one-third of India’s $16 billion ready-to-wear garment exports to the US, supplying global retail giants such as Target, Walmart, Gap, and Zara.
The atmosphere in Tiruppur’s factories has turned bleak. At N Krishnamurthy’s unit, only a handful of sewing machines remain operational, as orders from American clients have abruptly halted. “September onwards, there may be nothing left to do,” Krishnamurthy told BBC News. He has suspended expansion plans and placed 250 recently hired workers on hold.
The timing is particularly damaging because the months ahead typically generate nearly half of annual sales, driven by the US market’s preparation for the Christmas season. “The entire production chain was frozen last month,” said Siva Subramaniam, owner of Raft Garments, highlighting uncertainty about how businesses will sustain wages amid the downturn.
Economists and trade experts point out the tariff differential strongly undermines India’s competitiveness. For instance, at a 50% tariff, an Indian-made shirt priced at $10 would cost US buyers approximately $16.40, far surpassing comparable goods from China ($14.20), Bangladesh ($13.20), or Vietnam ($12.00). Even if tariffs reduce to 25%, India risks being marginalised.
Gems and Jewellery Industry Faces Renewed Challenges
Approximately 1,200 kilometres west, in the Mumbai export zone and neighbouring Surat the world’s diamond-cutting centre tariffs have intensified pressures on a $10 billion gems and jewellery sector.
Adil Kotwal, owner of Creation Jewellery, which ships 90% of its diamonds to the US, expressed grave concerns over shrinking profit margins already as low as 3-4%. “Who can absorb these tariffs? Even US retailers will not be able to,” he explained.
Surat’s industry was grappling with declining global demand and rising competition from lab-grown diamonds even before the tariffs. Now, with US orders plummeting, factories operate just 15 days a month on average, and hundreds of contract workers have been sent on indefinite leave.
Shailesh Mangukia, who once employed 300 workers in his diamond polishing unit, said the monthly number of processed stones plunged from 2,000 to under 300. Local union leader Bhavesh Tank described worsening conditions: “Workers face decreasing wages, forced leave and shrinking incomes.”
Shrimp Exporters Brace for Economic Shock and Uncertainty
India, the world’s second-largest shrimp exporter, is similarly bracing for a blow. The US is one of its largest markets, but tariffs nearing 60% now threaten the livelihood of more than half a million shrimp farmers and 2.5 million indirectly dependent workers.
Thota Jagadeesh, a leading shrimp exporter from Veeravasaram, detailed the confusion and damage wrought by the tariffs. “This is the peak season for US buyers preparing for Christmas and New Year sales. Farmers here are just starting their new cultivation cycle. Trump’s tariffs caused great confusion. We’re unable to make any decisions,” he told BBC News.
Shrimp hatchery production has contracted sharply as a result. MS Varma of Srimannarayana Hatcheries reported a 30-40% fall in larvae production from 100 million to around 60-70 million annually. Prices have already dropped by 60 to 72 cents per kilo and are expected to fall further once the full tariff rate applies.
Trade Experts Warn of Long-Term Impacts and Need for Diversification
Experts caution that India could suffer a significant loss in its trade share with the US, as buyers divert orders to countries with lower tariffs. “We can expect the diversion of trade, with US buyers moving to Mexico, Vietnam and Bangladesh,” said Ajay Srivastava, senior analyst at the Global Trade Research Initiative.
While the Indian government has announced measures to mitigate damage such as suspending import duties on raw materials for export production many industry leaders believe these steps fall short amid the scale of disruption.
Trade negotiations appear stalled amid growing geopolitical tensions. The latest scheduled talks between India and the US were reportedly cancelled, with American officials criticizing India’s perceived “cosying up” to China and accusing it of serving as a “laundromat” for Russian goods.
Gopal Naddur from the Asia Group consultancy noted the complex landscape: “The future of India-US talks now depends heavily on the Trump administration’s priorities, domestic as well as those involving Russia and China.”
Broader Economic and Social Consequences
India’s export sectors support millions of workers directly and indirectly. Combined impacts on textiles, gems, jewellery, and seafood threaten to exacerbate the country’s ongoing job creation crisis.
According to industry estimates, the garment sector employs approximately 45 million people nationwide, while the gems and jewellery processes involve around five million livelihoods. Shrimp farming affects nearly three million stakeholders in coastal regions.
Beyond immediate business downturns, the tariffs risk reversing years of trade progress and could derail India’s ambitions to scale up exports and deepen engagement with global markets.
Outlook: Navigating a Complex Geopolitical and Economic Terrain
In the face of escalating tariffs and diplomatic friction, industry stakeholders stress the urgency of diversifying export markets and accelerating self-reliance initiatives.
“India needs to leave no stone unturned in initiating trade dialogues with other countries and strengthening domestic industries,” said Naddur. Several recent trade agreements with the UK and Australia have provided alternative opportunities, yet the US remains by far India’s largest export destination.
With limited clarity on the trajectory of US policy and geopolitical dynamics involving Russia and China, uncertainty persists.
Industry leaders emphasize cautious optimism but remain deeply concerned. “The coming months will be a defining test of resilience for India’s exporters and workers alike,” Srivastava concluded.
Keywords: India-US trade war, tariffs on Indian exports, Indian textile industry, gems and jewellery exports, shrimp farming India, trade negotiations India-US, export market diversification, economic impact of US tariffs on India
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