Exporters nervous, fear losing US market to Asian competitors

File picture: Exports of labour-intensive products, such as textiles, gems & jewellery and leather goods to the US are likely to come to a “grinding halt” with the imposition of cumulative tariffs of 50 per cent, say exporters.
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AMIT DAVE

As US President Donald Trump’sreciprocal tariffs of 25 per cent on Indian exports come into play, exporters are ‘losing sleep’ over the announcement of the additional 25 per cent penalty on New Delhi for buying Russian oil, applicable from August 27.

Exports of labour-intensive products, such as certain textiles, gems & jewellery, chemicals, and leather goods to the US are likely to come to a “grinding halt” with the imposition of cumulative tariffs of 50 per cent, say exporters. India’s entire market share could be lost to competitors from South and Southeast Asia, which attract much lower tariffs of 19-20 per cent.

While many are pinning their hopes on the successful conclusion of the India-US bilateral trade agreement talks,an overwhelming majority wants a bailout package from the government.

54% of exports to the US to take a hit

As much as 54 per cent of India’s exports to the US of about $86.5 billion is likely to take a hit, says exporters’ body FIEO

“This is a major blow and most orders to the US will be cancelled and will get shifted to other countries such as Vietnam, Pakistan, Bangladesh or Cambodia. The government needs to buy time, like 90 days,to negotiate an amicable solution,” said Israr Ahmed, an exporter of leather products

Theapparel industry faces the risk of getting completely out-priced in the US market, bringing the Indo-US apparel trade to a grinding halt, said Mithileshwar Thakur, Secretary-General, AEPC.

“This will have serious implications on overall Indian apparel exports, as the US is the topmost destination for garment exports, accounting for 33-34 per cent share,” Thakur said.

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“I have a friend who employs 10,000 people and about 50-60 per cent of his exports are to the US. He is having sleepless nights…With earlier MFN tariffs of 15-17 per cent, tariffs are now up to 67 per cent. So, it is going to be curtains for us,” said textile exporter Sanjay Jain.

Industry to seek bail-out package

The industry will approach the government for a bailout package, Thakur said.

The government should give an immediate export incentive in cashso that we can stand up and fight,” Jain said.

They also want enhancement in rates under RoDTEP and the RoSCTL schemes, that reimburse exporters for the input duties paid, early reinstatement and enhancement in rates of the interest equalisation scheme to provide export credit at subsidised rates, introduction of some shipping lines , and ensuring timely payment of all dues.

We must strategically utilise the upcoming 21-day window to negotiate , said Ajay Sahai, DG, FIEO.

“While we must remain firm on our red lines — in sensitive sectors such as agriculture and dairy — we should demonstrate our commitment to a balanced and forward-looking partnership by exploring alternative, mutually beneficial concessions in other sectors,” Sahai said.

Published on August 7, 2025