‘Worse than Covid': Donald Trump's 50% tariffs on India leave exporters troubled; will US move impact China+1 strategy?
US President
Donald Trump
's escalation of trade tussle with India - doubling tariff rate on India from 25% to 50% in just a week - has left Indian exporters hunting for alternatives to deal with the blow.
Indian export businesses, which thrived on providing cost-effective products to American consumers, are now forced to revise their business approaches and seek alternative solutions.
The 50% tariffs on Indian products exported to the US makes them steeply expensive in the US market. This could severely impact exports, particularly affecting smaller enterprises, according to a Bloomberg report.
Trump's tariffs: 'Worse than Covid'
"This is worse than Covid for us," Lalit Thukral, founder of apparel exporter Twenty Second Miles was quoted as saying in the report.
"At least, there seemed to be an end to it. This tariff situation is just getting worse." Thukral expressed concerns about having to sell products at a loss due to these heightened tariffs.
Also Read |
Tariff pe tariff': Trump tantrums jolt US-India ties. Will Quad fall apart?
As rising tariffs threaten the survival of smaller businesses such as Twenty Second Miles, major companies are exploring various strategies, including shifting manufacturing to nations with reduced tariff rates, seeking customers in different markets and looking at potential US-based acquisitions.
Indian exports uncompetitive after 50% US tariff
Gokaldas Exports Ltd., which generates approximately 70% of its earnings from the US market and ranks amongst India's biggest clothing exporters, intends to increase production at its facilities in Kenya and Ethiopia, where US duties are only 10%.
"Africa is looking like a good source at the moment," Gokaldas' Managing Director Sivaramakrishnan Ganapathi told Bloomberg. "We are seeing a huge amount of inquiries for production from that region from American customers."
How will Trump's tariffs hit India?
As exporters look to manufacture in other markets, the report said that the move could severely impact PM
Narendra Modi
's signature 'Make in India' programme and hit India's aspirations to emerge as a manufacturing alternative to China. Some economists suggest that the imposed Trump tariffs could reduce India's gross domestic product by up to 1%, the report said
Trump's tariff offensive has been accompanied by critical comments, describing India's trade restrictions as "obnoxious" and its economy as "dead", prompting counters from RBI and commerce minister
Piyush Goyal
who has asserted that India is the fastest growing major economy in the world.
Also Read |
Explainer: Donald Trump's 50% tariffs - will India budge on Russia crude oil trade?
The business community expects the government to come to their aid.
Trade associations representing various sectors including apparel, gems and jewellery, and shrimp exports are increasingly seeking governmental assistance. The Confederation of Indian Textile Industry is urging for expedited governmental measures to assist local apparel exporters, whilst the shrimp export sector is requesting export incentive schemes.
Chairman Kirit Bhansali of the Gems and Jewellery Export Promotion Council has issued a statement requesting duty drawbacks, pre-shipment loans and working capital interest deferrals.
Highest rates for 'BICS' nations
According to Rohit Kumar, founding partner at public policy consultancy The Quantum Hub, the business sector had anticipated "there would be more predictability."
The potential US tariffs pose an immediate challenge to India's strategy of positioning itself as an alternative manufacturing hub to China.
The long-term implications could be more severe as policy frameworks evolve, according to Kumar's assessment of supply chain restructuring efforts.
Also Read |
India in crosshairs: Trump's Russia tariffs- How it could make China great again
Bloomberg Economics analysis by Chetna Kumar and Adam Farrar says, "The additional 25% oil penalty tariff would take the hit to US–bound exports to 60%, dragging GDP by 0.9%. This drop would be concentrated on the key items impacted by these tariffs such as gems and jewelry, textiles, footwear, carpets and agricultural goods — all labor-intensive industries."
The new 25% US tariffs, imposed as a response to India's Russian oil purchases, will become effective in 21 days, allowing for intensive diplomatic discussions between New Delhi and Washington DC.
Dealing with US tariffs: What exporters are planning
Businesses are actively developing contingency plans. According to a Reuters report, Titan Ltd, a Tata Group jewellery manufacturer, is exploring options to relocate some production facilities to the Middle East, where US import duties are more favourable.
Indian pharmaceutical companies are developing contingency plans in response to potential US tariff implementations, despite awaiting formal clarity on the matter.
"We'll be putting a initially small tariff on pharmaceuticals, but in one year — one and a half years, maximum — it's going to go to 150% and then it's going to go to 250% because we want pharmaceuticals made in our country," Trump had said Tuesday in an interview on CNBC.
Major items US imports from India
Alembic Pharmaceuticals Ltd., which generates approximately 30% of its revenue from US operations, is considering acquisitions in America to enhance its manufacturing presence, according to Joint Managing Director Pranav Amin's statement to Bloomberg News.
Aurobindo Pharma Ltd., with nearly half its sales from the US market, has secured the purchase of Indiana-based Lannett Co. on July 30, strengthening its American manufacturing capabilities.
The automotive sector faces significant impact, with $3 billion in component exports at risk, as reported by the Automotive Component Manufacturers Association. The proposed 50% tariff places India at a disadvantage compared to competitors like Vietnam, Indonesia and China.
Also Read |
Donald Trump's 25% additional tariff on India: What are 'secondary tariffs' and how do they differ from 'secondary sanctions'? Explained
Companies are actively seeking to expand their non-American customer base to establish a more diverse market presence globally.
Looking beyond US
Welspun Living Ltd., a prominent home fabrics supplier to the US market, recently disclosed to analysts its strategy to expand into the UK, European Union, Middle East, Australia, New Zealand and Japan, aiming to decrease its US market dependency.
SNQS International, operating from Tiruppur's textile centre in southern India, currently derives 20% of its revenue from US operations. Its founder V. Elangovan has outlined plans to enhance focus on European markets.
According to Thukral of Twenty Second Miles, major textile producers are now accepting smaller, lower-value orders to maintain operational continuity, potentially affecting smaller enterprises' market share.
Stay informed with the latest
business
news, updates on
bank holidays
and
public holidays
.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
9 minutes ago
- Indian Express
NITI Aayog meet calls for reforms to boost India's R&D ecosystem
Removing bureaucratic and procurement bottlenecks through AI-enabled systems, pre-approved vendor lists, and digitised approvals, and establishing a centralised funding database were among the key recommendations made at the fifth regional consultative meet on 'Ease of Doing Research and Development (R&D)'. The meet, jointly initiated by NITI Aayog and hosted by the Gujarat Council on Science and Technology (GUJCOST), concluded on Wednesday at Science City, Ahmedabad, with a renewed vision to make India a globally competitive hub for research and innovation. The two-day deliberation, held on August 12 and 13 brought together over 110 eminent leaders from Gujarat, Maharashtra, Madhya Pradesh, and Rajasthan. Participants shared insights and actionable recommendations to simplify administrative processes, accelerate translational research, strengthen institutional competitiveness, and enhance access to knowledge resources. Prof Vivek Kumar Singh, Senior Adviser, NITI Aayog, opened the discussions by stressing upon 'the urgent need for structural reforms, agile regulatory systems, and collaborative models to unlock India's R&D potential'. 'Scientific advancement demands not only investments but also an ecosystem that is agile, transparent, and enabling,' he said. Delivering the valedictory address, Dr V K Saraswat, Member (S&T), NITI Aayog, urged stakeholders to transform Indian research institutions into globally benchmarked centres of excellence. He called for 'simplification of compliance procedures, institutional benchmarking, and stronger academia–industry linkages to drive high-impact and self-reliant research'.
&w=3840&q=100)
First Post
11 minutes ago
- First Post
'Not a single policymaking person who knows Russia,Ukraine' as Trump heads for talks with Putin
Negotiations with Moscow have been handled not by diplomats steeped in years of Russia policy, but by real estate developer Steve Witkoff, who has no background in foreign affairs When Donald Trump steps into a room with Vladimir Putin in Alaska on Friday (August 15), the setting will be a far cry from his first headline-grabbing encounter with the Russian leader in Helsinki six years ago. That summit went so poorly that Fiona Hill, his then top Russia adviser, later admitted she had considered faking a seizure to shut it down. This time, there are unlikely to be any Russia specialists within arm's reach of the president. In his second term, Trump has purged swathes of the federal workforce, elevated loyalists over seasoned experts and sidelined the traditional machinery of foreign policy. STORY CONTINUES BELOW THIS AD Negotiations with Moscow have been handled not by diplomats steeped in years of Russia policy, but by real estate developer Steve Witkoff, who has no background in foreign affairs. Former ambassador Eric Rubin says Trump 'does not have a single policymaking person who knows Russia and Ukraine advising him', Financial Times reported. Ordinarily, before a meeting of this magnitude, the US national security council (NSC) would be corralling input from across government to prepare the president for anything Putin might throw at him. Known for his command of detail and skill in exploiting gaps in an opponent's knowledge, Putin has been in power for a quarter of a century. That process has been hollowed out. Dozens of foreign policy and national security officials were forced out of the NSC in May. More than 1,300 state department employees were let go last month, including many analysts covering Russia and Ukraine. The diplomatic corps has also been hit hard; the American Foreign Service Association estimates around a quarter of foreign service officers have quit since January. Top posts dealing with Russia and Ukraine remain unfilled. The administration insists the cuts will make the government 'leaner' and more responsive. Deputy White House press secretary Anna Kelly said Trump still gets input from leaders at the state department, NSC and intelligence agencies before making decisions. But in practice, the most senior roles are concentrated in the hands of a few figures, including secretary of state Marco Rubio, who is also serving as acting national security adviser. STORY CONTINUES BELOW THIS AD Trump has said the Alaska meeting will be 'a feel-out' and that he will know 'within two minutes' whether progress is possible. 'I may say 'lots of luck, keep fighting', or I may say 'we can make a deal',' he told reporters this week. For many former officials, that approach rings alarm bells. Daniel Fried, a former ambassador to Poland, warned: 'You can't have him and Witkoff winging it because they just don't know enough. You need somebody in the room who can just look at the president, roll his eyes and shake his head.' In Helsinki in 2018, Trump publicly questioned his own intelligence agencies' findings on election interference, accepting Putin's denials instead. Back then, he had what were described as the 'adults in the room' – experienced hands who tried to temper his impulses. John Bolton, his national security adviser at the time, recalled trying to brief Trump on nuclear weapons during the flight to Helsinki, while the president watched a football match. STORY CONTINUES BELOW THIS AD This time, those guardrails are gone. Fried put it bluntly: 'This is not an administration that is going to have an experts-led process.'
&w=3840&q=100)
First Post
11 minutes ago
- First Post
India plans to open uranium sector to private players to boost nuclear expansion
The move aims to attract billions of dollars and support the country's ambitious goal to expand nuclear power capacity 12 fold by 2047 India is planning to open its uranium mining, import, and processing sector to private companies, ending a decades-long state monopoly, according to a Reuters report, citing government sources. This move aims to attract billions of dollars and support the country's ambitious goal to expand nuclear power capacity 12 fold by 2047. In April, Reuters had reported that Prime Minister Narendra Modi's government is also planning to relax requirements to allow foreign players to take a minority stake in power plants. STORY CONTINUES BELOW THIS AD Currently, India's government tightly controls uranium mining and processing due to concerns over nuclear material misuse, radiation safety, and strategic security. It will, however, continue to manage spent uranium reprocessing and plutonium waste handling, in line with international norms. To meet rising demand for nuclear fuel amid this expansion, the government is drafting a regulatory framework that would allow private Indian firms to participate in mining, importing, and processing uranium. The policy is expected to be announced within the current fiscal year, reported Reuters. In addition, private companies may be permitted to supply critical control system equipment for nuclear power plants, sources said. Globally, countries such as Canada, South Africa, and the United States already allow private firms to mine and process uranium. Domestic supply not enough According to government data, India has an estimated 76,000 tonnes of uranium — enough to power 10,000 megawatts of nuclear energy for 30 years. However, sources cautioned that domestic reserves would cover only about 25% of the fuel needed to support the country's planned nuclear expansion. The remaining demand would require imports, along with a significant boost to uranium processing capacity. In its February 1 budget announcement, the government revealed its intention to open up the nuclear sector, though it did not provide specifics. STORY CONTINUES BELOW THIS AD The move has since prompted several major Indian conglomerates to begin drafting investment plans. Still, experts warn that implementing the policy may face hurdles, as revising existing legislation could prove legally and politically complex. 'It's a major and bold initiative by the Indian Government which is critical for achieving the target,' Reuters quoted Charudatta Palekar, independent power sector consultant, as saying. 'The challenge will be to define quickly the rules of engagement with private sector,' Palekar added. New Delhi will have to change five laws, including the ones regulating mining and electricity sectors and India's foreign direct investment policy to enable private participation in many identified activities, the sources said. With inputs from agencies
