India’s booming export sector is facing a storm of challenges like never before. This confusion comes as US President Donald Trump announces huge 50% tariffs on imports from India. This abrupt policy change has sent shockwaves through multiple industries, most noticeably in garment manufacturing, shrimp production, and diamond processing. Our exporters are confused and scared about what their future holds. They are steering through a landscape that has shifted dramatically and unexpectedly.
India’s growing importance to the global export market Indi as a major player in the global export market. It is particularly famous for its textiles, prawns and gems and jewellery. The country’s garment export hub, Tiruppur, is a key contributor to India’s $16 billion (£11.93 billion) export of ready-to-wear clothing. Brands such as Target, Walmart, Gap, and Zara all depend on this area to maintain their fast fashion/quick supply chain. The silence in N Krishnamurthy’s garment manufacturing unit in Tiruppur echoes the distress felt by many in the industry following the implementation of the tariffs.
The garment sector is not the only one where the lack of a severance pay standard has wrenching consequences. India’s shrimp industry—which is, along with Vietnam, among the largest shrimp-producing countries that produce for export—is similarly at risk. The United States is one of the largest markets which could affect an additional 2.5 million people indirectly because of the tariffs. In return, about half a million shrimp farmers will experience an immediate blow to their livelihoods. As demand decreases because they can’t afford the higher costs, every community in this country feels the trickle-down effects.
In Tiruppur, where garment production has exploded, the situation has come to a boiling point. Factories that once supported close to five million families now run an average of less than 15 days per month. The rates have, in effect, put hundreds of contractors on indefinite leave. As fantastic a drive as that sounds to be, Shailesh Mangukia’s unit once employing 300 workers is only running at about half capacity today.
Adil Kotwal owns Creation Jewellery — he sells 90% of his diamond-studded creations to the US. He’s especially alarmed by these recent developments. He fears that years of effort to establish a foothold in the US market could unravel within months due to the new financial barriers. The tariffs have chased US buyers off of his client roster. This pivot creates a tremendous liability for the viability of his enterprise.
In Surat, India’s diamond-cutting and polishing center, the story is identical to that of Tiruppur. The region is in the midst of an acute crisis marked by plummeting global demand and rising competition from diamond substitutes like lab-grown diamonds. In Surat, the world’s largest diamond polishing center, the monthly number of diamonds polished has dropped from 2,000 to a mere 300. We’re delighted this deepening decline underscores all the challenges an industry so dependent on international trade is going through.
Trump’s tariffs aren’t just serious on symbolic level, though the economic ramifications stretch beyond any one business. They threaten the livelihoods of whole communities that depend on export-related activities. India’s export businesses usually account for almost 50 percent of annual sales in the weeks around September and October, in time for Christmas shopping. This key selling season has already been deeply hurt by tariffs, the impact of which is exacerbated with the sudden enforcement of tariffs.
Today, this is perhaps most vividly illustrated by the pricing of Indian-made garments. That same shirt that used to cost $10 is now costing US consumers the equivalent of $16.40 due to these punitive tariffs. This increase pushes the cost beyond comparable products from China, Bangladesh, or Vietnam. This ETF price increase is so large it’s bringing into question the competitiveness of Indian goods in the global marketplace.
Exporters in Tiruppur are finding it hard to cope with uncertainty and reduced production capacity. To do so, they need to get past huge obstacles to adjust to the new competitive landscape created by these tariffs. While just a month ago, businesses were still attempting to adapt to strenuous new rules. Consequently, the whole production pipeline came to a complete standstill.