Experts have mixed opinions about impact of US tariffs on job market

Economic Times

19 hours ago

Synopsis
US tariffs on Indian exports spark job concerns. Experts warn of potential job losses in textiles, gems, and other sectors. Some believe India's domestic demand and trade diversification will cushion the blow. Negotiations are expected, and India may redirect trade. Uncertainty may persist, leading to cost containment and hiring freezes. IT and GCC sectors might also face indirect effects.
Agencies
Representational
Mumbai: The steep tariff imposed on Indian exports to the US has evoked concerns among staffing experts with some of them warning of an immediate jobs crisis while others believe India's domestic demand and trade diversification will help cushion the impact. "The recent imposition of additional US tariffs is expected to have a direct and substantial impact on India's employment landscape. This will especially impact those industries relying heavily on the US market for business continuity and growth," workforce solutions and HR services provider Genius HRTech founder, chairman and managing director R P Yadav told PTI.
Sectors like textiles, auto components, agriculture, and gems and jewellery are the most vulnerable, with MSMEs bearing the brunt, said Yadav. He estimates that 2,00,000 to 3,00,000 jobs are at immediate risk, with textiles alone, which is labour-intensive, potentially losing 1,00,000 jobs, if the tariff regime continues beyond the next six months. "Similarly, in the gem and jewellery sector, including units in Surat and SEEPZ in Mumbai, thousands of jobs are at risk due to reduced demand and cost escalation in the US market," he added.
However, TeamLease Services Senior Vice President Balasubramanian Anantha Narayanan does not see the possibility of job losses, saying India is largely a domestic consumption-driven economy, unlike China. "At this point in time, we aren't seeing any signs of a slowdown or loss of jobs. This also by extension means that our jobs are largely in service of domestic demand too, with the exception of some sectors like ITeS among others. Our exports to the USA are USD 87 billion, which is roughly about 2.2 per cent of our overall GDP. Largely pharma, electronics etc. won't be affected for now, which will further limit the export exposure to industries such as textiles, gems and jewellery among others," he said. Moreover, these tariffs come into effect later this month, and some negotiations are likely to happen before that, he added. "On the other side, we've also had several positives by way of the recently closed FTA with the UK and other countries. Even if these US tariffs do come about, we'll definitely figure out a way of redirecting or diversifying our trade to other markets. Therefore, at this point in time, we aren't seeing any signs of a slowdown or loss of jobs. It's an evolving situation and we'll get to know more in due course of time," he said. The slowdown in jobs growth is much more due to the overall slowdown in global demand and consumption, uncertainty around tariffs, and geopolitical conflicts in various parts of the globe, he added. Meanwhile, CIEL HR MD and CEO Aditya Mishra said the US tariff scenario is unsettling for Indian exporters, especially in sectors that are heavily dependent on the American market, such as electronics, textiles, gems and jewellery, auto components, leather, footwear, shrimp, and engineering goods. "Even industries outside the direct tariff ambit, like pharmaceuticals, are feeling the ripple effect through costlier upstream chemicals and materials," he noted. However, as negotiations are expected, this phase of uncertainty may persist through the third quarter of this financial year, said Mishra. "While widespread layoffs appear unlikely at this stage, companies are already in cost-containment mode, reducing discretionary spending, streamlining production, and freezing hiring. The immediate pressure will be on temporary and contract roles, particularly shop-floor workers, artisans, sales and logistics staff, and some mid-level managers in export-led units. This will have a cascading effect on thousands of MSMEs in the supply chain, which collectively account for a large share of employment," he added. This situation might also indirectly affect sectors like IT and GCCs, he said, adding that the IT sector is already experiencing slow spending and hiring, and this additional uncertainty could delay its recovery further.
"GCCs (global capability centres) are likely to take a cautious approach to hiring and investments until there is greater clarity on trade negotiations and market stability. If the tariff situation persists, India's market share in the US could shrink, leading to longer-term repercussions for exporters and the industries that depend on them," he added.