NEW DELHI: Textile importers based in the US are reaching out to Indian exporters, asking them to bear the costs that may emanate from the US tariffs going forward, two industry executives .
If they agree on the importers requests, the industry will feel the heat of shrinking margins on the exported products, the executives say.
“We got an email from them (US-based importers) day before yesterday asking for a 10 per cent discount on all the shipments going forward. And this is happening as we speak,” said Subin Mitra Founder of Groyyo.
Mitra said that while business will come to India but there will certainly be more pressure on margins of the final products than ever before.
As per Mitra the impact of the discounts demanded by the US importers will spill over to the entire supply chain.
“I think how most brands are looking at it is we cannot absorb the entire 20 per cent so why don’t you reduce prices by 10-12 per cent and remaining we will absorb so there is definitely going to be pricing pressure on the supply chain,” he added.
However, the executives say that the disparity in the rates of reciprocal tariffs will place the Indian manufacturers and exporters on a better place than countries such as China Vietnam, Cambodia and Bangladesh which will have to bear more tariffs than India.
Earlier in the week, US President Donald Trump paused the reciprocal tariffs on dozens of countries that have engaged in negotiations with the US administration. However, the 125 per cent tariff levied on China will continue. As per the new conditions, during these three months reciprocal tariff of 10 per cent would be in effect.
There will be pressure on the margin but Indian exporters or manufacturers will enjoy an upper hand due to the differences in the tariff rates when it will be come into effect after 90 days, the executives say.
They highlight that the despite the discounts, Indian products will be cheaper than the market by 10-15 per cent and this is “very interesting opportunity.”
Rahul Mehta, Chief Mentor, Clothing Manufacturers Association Of India (CMAI) also said, “Buyers are negotiating with the exporters asking for them to bear the cost of the additional duties.”
Pointing out the strategy of US tariffs after 90 days relaxation, Jatin Mahajan, Secretary, Association of Diagnostics Manufacturers of India (ADMI) said that the global trade will continue to be volatile, and therefore, Indian traders must create a tariff-resilient pricing strategy playbook.
Industry executives are also focusing on market diversification, as Mahajan said,”In the long term, we must explore market diversification by exploring new and emerging markets, creating unique and innovative products whose demand is not significantly impacted by pricing variations, and generating demand for their quality, efficacy, and efficiency.”
“The tariff revisions might allow Indian brands to position just under these critical thresholds. These tariff changes are creating real breathing room for Indian brands trying to break into saturated markets,” said Devansh Jain Nawal, Co-founder & CEO of Culture Circle.
As per the official data of Commerce and Industry Ministry, the textile and apparel industry contributes 2.3 per cent to the GDP, 13 per cent to industrial production, and 12 per cent to exports.
India exported textile items worth USD 34.4 billion in 2023-24, with apparel constituting 42 per cent of the export basket, followed by raw materials/semi-finished materials at 34 per cent and finished non-apparel goods at 30 per cent. It is also the second largest employment generators, after agriculture, with over 45 million people employed directly, including many women and the rural population. (ANI)
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