Ralhan further observed that many of India’s direct competitors in labour-intensive sectors such as textiles, garments, leather and footwear, including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia, have also been subjected to the same 10 per cent tariff. Consequently, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the US market.
FIEO says the additional 10 per cent US Section 301 tariff will raise landed costs for Indian goods but should be read against competitor tariff levels.
India is in the lower tariff category, while several rivals face 12.5 per cent.
Exporters in textiles, garments, leather and footwear are advised to assess duties and exclusions product-wise.
“More importantly, Indian exporters could benefit from trade diversion in several product segments where competing countries are subject to the higher 12.5 per cent tariff. Even a differential of 2.5 per cent can influence sourcing decisions in highly competitive markets, particularly where Indian exporters are able to offer quality products, reliable deliveries and stable supply chains,” he added.
FIEO emphasised that the measure is not a finding against Indian exporters or Indian products, but forms part of a broader country-level US policy applicable to a large number of economies. Several important product categories, including steel, aluminium, auto components, pharmaceuticals, pharmaceutical ingredients, certain agricultural products already covered under Section 232 measures, continue to enjoy exclusions, thereby reducing the impact on a number of export sectors.
Ralhan noted that the Government of India deserves appreciation for proactively strengthening the country’s legal and policy framework on forced labour, which has contributed to India being placed in the lower tariff bracket. “The Government’s timely policy interventions and continuous engagement with the United States have helped India secure a relatively competitive tariff position vis-à-vis many of its key trading rivals. Going forward, sustained bilateral dialogue will be equally important to secure wider product exclusions, seek treatment comparable with other partner countries, pursue India’s inclusion in any textile tariff-rate quota mechanism and work towards an early review of the tariff,” he said.
FIEO advised exporters not to draw broad conclusions based solely on the additional 10 per cent tariff but to undertake a product-wise assessment of the applicable US tariff, available exclusions and the tariff treatment of competing supplier countries. Exporters should also strengthen supply-chain compliance, enhance productivity and continue investing in quality, innovation and value addition to leverage emerging opportunities.
“Indian exporters have repeatedly demonstrated resilience in overcoming global disruptions. While the new tariff presents challenges, it also offers opportunities for India to expand its presence in sectors where competing countries now face relatively higher duties. With proactive industry response and continued Government support, Indian exports remain well positioned to sustain their growth in the US market,” Ralhan concluded.
Fibre2Fashion News Desk
