Challenges Facing the Indian Textile Industry
The Indian textile industry is under significant pressure due to increased US tariffs, leading to potential job losses and economic strain.
Key Issues and Industry Demands
- The industry is requesting immediate government intervention, including cash support and a moratorium on loan repayments, to handle a steep 50% US tariff increase.
- There is a push for the fast-tracking of Free Trade Agreement (FTA) negotiations with the EU as a strategic move to mitigate losses in the US market.
- Manufacturers are advocating for the reintroduction of the Interest Equalization scheme and a focused textile market scheme.
Government and Industry Actions
- The Ministry of Textiles has formed four committees to propose recommendations on fiscal policies, structural reforms, and innovation to achieve a target of $100 billion in exports by 2030.
- As the US remains India's largest textile export market, the hike in tariffs from 25% to 50% is a major concern.
Implications and Concerns
- The tariff increase has disrupted cash flow, prompting exporters to seek sops, soft loans, and interest subvention schemes for immediate financial relief.
- With US buyers shifting to countries with lower tariffs like Vietnam and Bangladesh, Indian exporters face significant competitive pressures.
- The Ministry of Finance estimates over half of India's merchandise exports to the US are affected by the higher tariffs.
Export Statistics
- The US accounts for 33% of India's Ready-Made Garments (RMG) exports, with home textiles and carpets heavily reliant on the US market as well.
- Home textiles see 60% of exports going to the US, while carpets account for 50%.
