The knitted apparel sector faces an MFN tariff of 13.9 per cent along with a 50 per cent additional tariff, bringing the total to 63.9 per cent. Similarly, textiles and non-knitted apparel face MFN tariffs of 9 per cent and 10.3 per cent, respectively, resulting in the aggregate figures mentioned above.
The textile industry contributes 2.3 per cent to India’s GDP, 13 per cent to industrial production, and 12 per cent to exports. It is also the second-largest employment generator after agriculture, employing over 45 million people directly, including a significant share of women and the rural workforce.
India is the third-largest textile exporter to the US after China and Vietnam. Over the past five years, India has steadily gained market share in all textile categories, while China’s share has declined. However, the latest tariffs could reverse this progress by eroding India’s competitiveness and potentially benefiting rivals such as China and Vietnam, which face tariffs of only 30 per cent and 20 per cent, respectively.
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Seafood exports hit with 58.5% tariff
Seafood exports are the second-worst hit, facing an effective tariff of 58.56 per cent. Indian exporters, who send more than half their output to the US, fear steep losses and order cancellations as the higher duty comes into effect. India is currently the third-largest supplier of seafood to the US after Canada and Chile, which face tariffs of only 35 per cent and 10 per cent, respectively. Ecuador, which stands just below India in the ranking, is also more competitive with a much lower tariff of 15 per cent. “This also impacts the prices for US consumers and makes India less competitive against rivals like Ecuador,” noted SBI Research.
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Gems and jewellery hit with 53.2% tariff
The gems and jewellery sector of India will face a 53.2 per cent tariff from August 27. The sector, which accounts for around $10 billion in exports, is critically dependent on the US market, earning about 40 per cent of its revenue from there. The steep tariff is expected to hurt competitiveness, especially when compared with Switzerland, where the duty is only 39 per cent.
Organic chemicals and furniture accessories are also under pressure, with effective tariffs of 54 per cent and 52 per cent respectively. Steel, Aluminium and copper and Machinery parts are also among sectors facing more than 50 per cent tariff at 51.7 per cent and 51.3 per cent respectively.
Auto at 26%, petroleum at 3.85% duty
Not all sectors are equally hit. Auto and auto components have been hurt less compared to other sectors, facing a 26 per cent tariff. Refined petroleum products are hit the least, with duties of only 3.85 per cent.
Pharma, smartphones largely safe
The US has exempted pharmaceutical imports from India, a crucial relief as nearly 40% of India’s pharma exports are shipped there. Smartphones and steel are also relatively insulated due to exemptions and strong domestic demand.
SBI research noted that India’s major export items to the United States — ranging from textiles and gems to seafood and chemicals and worth more than $48 billion — are under threat, as competing countries like China, Vietnam, Indonesia and Japan face significantly lower tariffs of 30 per cent, 20 per cent, 19 per cent and 15 per cent, respectively.