Navigating US Tariff Challenges—Strategic Insights for the Indian Textile & Apparel Industry.

The United States stands as a crucial export destination for the Indian textile and apparel industry, with annual shipments reaching approximately $10 billion.

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The recent imposition of tariffs by the US on these imports presents a complex scenario, a double-edged sword offering a potential advantage while simultaneously exposing underlying vulnerabilities within the Indian manufacturing sector.

This development raises concerns about a potential slowdown in demand due to anticipated consumer price increases, heightened pressure on profit margins as US buyers seek price reductions, and the existing limitations in India's capacity for rapid export growth.

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Furthermore, the perceived temporary nature of these tariff increases may discourage essential investments in expanding production capabilities.

Some observers initially noted that India is better placed as it faces a 26% duty, which is lower than that imposed on key competitors such as Bangladesh (37%), Vietnam (46%), and Cambodia (49%).

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However, this initial optimism may be premature due to several fundamental reasons:

Relative Advantage vs. Underlying Cost Disparity:

Even with an 11% lower import duty than Bangladesh, Indian products might still be more expensive because the basic production cost in India is roughly 10-12% higher.

CREDITS: Wazir Advisors recent report.

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