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US tariff shock jolts Punjab exporters
Industrialists in Punjab say buyers may stop placing new orders and shift to countries like Vietnam, Bangladesh, Pakistan and Turkey where goods will be cheaper due to lower tariffs
The imposition of 25 % tariff announced by US President Donald Trump has come as a huge setback to textile and hand tool industry in Punjab. While negotiations with the Indian government are on, the imposition of tariff by the United States is likely to severely impact Punjab’s exports of textiles and apparels (T&A) and hand tools to the US market. It is also expected to make importers hold back on placing new orders. These import duties will come into effect from August 7.
Major industries in Punjab export yarn, textiles, hand tools, agri and tractor parts to the USA among other products. Exporters said countries like Vietnam, Bangladesh, Pakistan and Turkey are set to gain as their clients will naturally sway to countries where tariffs are lesser.
“The tariffs announced by the US President are not just disappointing but very worrying,” says Amit Thapar of Ganga Acrowools Limited in Ludhiana, which exports yarn to the US. Thapar, who is also the Chairman Export Committee of CII (Northern Region), said “A total of approximately $10.05 billion of total textile exports were made from India to US last year and this year till May, already growth is of 13 %.”
“The problem now which industry faces is lower tariffs on competing countries like Turkey (15% tariff), Vietnam (20% tariff), Pakistan (19% tariff), Bangladesh (20%), Sri Lanka (20%), all of these are lower than India. This puts Indian exporters at a huge disadvantage, the buyers have now been calling us and will start holding meetings to chart future path. At this moment, it is uncertain and I hope the situation improves,” he added.
The US contributes 28% of India’s total textile export of $36 billion.
SC Ralhan, president, Federation of Indian Export Organisations (FIEO) who is the managing director of Ludhiana-based Sri Tool industries said the tariffs are a major setback for the hand tool industry from Punjab which exports hand tool machinery worth ₹3000 crores to the US. “Our government is negotiating with exporters on this front. They are likely to compensate us but if implemented, it will be a huge setback. Countries like Vietnam and Turkey are set to benefit straightaway,” he said.
Upkar Singh Ahuja, president, Chamber of Commercial and Industrial Undertakings (CICU), said the industry in Punjab will be hit as besides textiles, hand tool machinery and auto parts are exported in huge quantities to the US. “We are hopeful that the Indian government will provide a respite from this soon,” he said.
