Gujarat's textile industry threatened by 50% US tariffs demands 10% export incentive

India Today

2 days ago

Gujarat's textile sector is staring at a severe crisis after the US announced a 50 per cent tariff on all imports from India — a move industry leaders say could force many exporters to shut shop. Industry stakeholders have urged the Centre to step in to take effective measures, including a 10 per cent export incentive to help offset the tariff's impact.advertisementThe new duty was imposed by US President Donald Trump in two stages — a 25 per cent tariff on all Indian imports and an additional 25 per cent penalty over India's continued purchase of Russian oil. The Indian government condemned the decision and has refused to bow to American pressure to stop buying Russian crude.The blow is particularly harsh for Gujarat, home to major textile hubs Ahmedabad and Surat. India's total textile exports to the US are valued at USD 10–12 billion annually, with Gujarat accounting for more than 15 per cent of that trade.
Sandip Shah, co-chairman of the textile committee of the Gujarat Chamber of Commerce and Industry, said exporters had initially hoped the earlier 25 per cent tariff would be rolled back after talks. "But with 50 per cent now in place, trade with America has become impossible," he said. "For textiles, the US market is now almost shut".According to Shah, such a sudden halt in trade will create serious liquidity problems. "If this is not resolved quickly, it could take the industry more than six months to recover," he warned.Many believe that Surat, known for its synthetic fabric exports, will be hit hard.Ashish Gujarati, former president of the Southern Gujarat Chambers of Commerce and Industries, said the city alone accounts for Rs 3,000–Rs 4,000 crore in direct exports to the US. "The indirect impact will be even bigger — losses could touch Rs 10,000–Rs 12,000 crore because several allied industries depend on textiles," he said.For some, the only option might be to shut down or relocate production. "If 50 per cent tariff is implemented, no one will be able to export to the US," said PR Kankaria, owner of Kankaria Textiles in Ahmedabad. "Units will close, artisans will lose jobs, and many will have to migrate".Industry bodies are urging the central government to step in. One proposal is for a 10 per cent export incentive to help offset the tariff's impact and redirect exports to other countries. "If we get incentives, our exports to other markets can triple," said Kankaria. "If not, everything will stop".advertisementThe US remains a key buyer of Indian textiles, and losing that market could have ripple effects across supply chains — from yarn makers to embroidery units.While the sector has diversified exports to regions like Europe, West Asia, and Latin America, replacing the US market in the short term will be difficult.The industry hopes for urgent action. "We still expect the government to make a decision in traders' interest so that losses are minimised," said Shah.With the trade standoff now tied to geopolitical tensions over Russian oil, analysts warn the textile industry's fate may depend as much on foreign policy as on economic measures.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends