Indian factories have begun to shut down after Donald Trump’s tariffs came into force on Wednesday.
Washington imposed a 25 per cent tariff on Indian goods over New Delhi’s purchases of Russian oil, taking the total tariff rate to 50 per cent, among the highest in the world.
The move imperils millions of jobs in India’s textile, gem and sea-food sectors, and is set to seriously disrupt the flow of the country’s goods to its largest export market.
“Textile and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness,” Subhash Chander Ralhan, the president of The Federation of Indian Export Organisations (FIEO), told The Telegraph.
“This sector is losing ground to lower-cost rivals from Vietnam and Bangladesh. As for seafood, especially shrimps, since the US market absorbs nearly 40 per cent of Indian seafood exports, the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress.”
Mr Ralhan warned Indian factories in small and medium sectors would become bankrupt if the tariff issue was not resolved quickly.
“However, leveraging the negotiating window for urgent diplomatic engagement with the US still remains the key,” Mr Ralhan said.
“With approximately 55 per cent of India’s US-bound shipments ($47-48 bn) now exposed to pricing disadvantages of 30-35 per cent, Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, Cambodia, the Philippines, and other Southeast and South Asian countries,” Mr Ralhan added.
He called on India’s government to support industry through cheaper credit, loan moratoriums and faster trade deals, while stressing urgent diplomatic engagement with Washington.
Already, local workers are counting the cost of the tariffs.
Mukesh Kumar had saved for years to buy a £4,000 embroidery machine, hoping to expand his tiny five-worker unit in Noida, near Delhi.
“Half my earnings come from export orders,” Mr Kumar said. “My plans are dashed as orders are gone. I still have to pay my staff. I may have to let them go. I don’t know how we’ll survive,” he added.
Textile workers are already feeling the impact of the tariffs as hundreds of them have already being sent home - IDREES MOHAMMED/AFP
Shalin Mehra, who recently secured his export license for garments, told The Telegraph his first US order had been suspended before it even shipped. “With these tariffs, costs will shoot up and wipe out our margins,” Mr Mehra said. “We won’t even have money to buy fabric. It will hit our livelihoods.”
On Mr Mehra’s factory floor, fabric cutter Reshma stared at the empty workspaces. “This is how I feed my children,” she said. “If I lose this, there is nothing left.”
Mr Mehra shook his head as he watched his workers gather for another anxious day. “They live hand to mouth,” he said. “If they don’t earn today, they don’t eat tonight.”
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In Surat, the hub of the world’s diamond polishing trade, hundreds of workers have been sent home with no work and little compensation.
Vinesh Kholakiya had spent five years in the signing section at Krish Diamonds, a diamond factory in Kasanagar-Katargam in Surat.
Today, the 24-year-old was handed £75, an equivalent of £350 a month, and told to leave along with 100 others.
“Our manager said there is no work. Just go home,” Mr Kholakiya, a resident of Amroli in Surat, told The Telegraph.
At home, he must manage a £20,000 mortgage and ageing parents without any savings to fall back on. “I thought I would pay it back slowly,” he said. “Now, I cannot even earn enough to eat.”
Fifty colleagues remain only until pending jobs are finished, but they too expect dismissal. “There are no places to work,” he said. “The diamond industry is shut. I have no other skill. I can’t do anything else. I have to hope in these grim times,” he said.
