Today is April 2 and the Reciprocal Tariff is the date for the implementation. Due to this tariff, markets around the world have been scared and its effect can be seen in India too. However, according to experts, India may be one of the most affected countries with Trump Tariff, but major sectors like Auto, Pharma and Electronics are seen in a better position than apprehension. Whereas, the worst effect of this tariff can be on apparel sector and jewelery sector.
No auto-pharma, there will be more effect here
According to Emkay Research, India may be one of the most affected countries with the recipe of US President Donald Trump and it is discussing the potentially deep impact on India’s auto and pharma sector, but the real weakness is elsewhere. According to MK, the Indian apparel sector is at high risk in the US market. Actually, this is because the largest buyer of India’s textile exports is America and any kind of tariff may cause heavy losses to this business.
Business in US is so big
Looking at the figures, in 2023-24, America was about $ 36 billion (about Rs 3 lakh crore) from India, about 28 percent or 10 billion dollars (about Rs 85,600 crore). In this sector, Indian business with America has steadily increased.
In the year 2016-17 and 2017-18, the US share of total textile exports from India was 25 per cent in 2019-20 and reached 29 per cent in 2022-23. According to the report, 58% of carpets from India, 50% of other manufactured textiles, 44% of laminated clothes and about 33% of the export of woven and non-woven clothes were from the US.
Why threat hovering on this sector?
Now the biggest thing is that India’s dependence on textile exports to America, America’s dependence on India is not in equal proportion for imports. Meaning the direct impact of tariffs is going to be on India and it can suffer heavy losses in this sector. Looking at the figures, India stake in textile imports in the year 2024 was just 6 per cent, while China stakes 21 per cent, Vietnam 19 per cent and Bangladesh’s stake was 9 per cent.
Estimates on 10% mutual tariff
According to the Emkay Research, in view of the tariff rate to be imposed by India on imports, all Indian exports to the US will have an additional 10 per cent tariff. According to this, the tariff simulator shows that the imposition of an extra tariff of about 10% on Indian exports to the US will reduce India’s estimated CY26 US exports (about Rs 50,536 crore).