CHENNAI/COIMBATORE: Following US President Donald Trump’s imposition of 27% tariff on Indian exports, Tamil Nadu’s auto, textile, and leather sectors are bracing for disruptions, particularly in labour-intensive industries.
Indian leather and textile exporters are navigating both challenges and opportunities in response to these tariffs. Abdul Wahab, MD of KH Shoes, warned of potential order cancellations and declining exports. India’s total leather exports stand at $4.01 billion, with the US being the largest market, accounting for $873 million (21.71%). Tamil Nadu, which contributes 40% of this total, is especially vulnerable to the policy shift.
The state has already seen an 18% decline in exports, falling from $2.04 billion in FY 2023 to $1.66 billion in 2024. “The fall order season, crucial for holiday sales, has been severely affected. April to July is critical for production, and customers are already looking to share the burden of these tariffs.
From April 5, incoming goods will be subject to the new levy, significantly increasing costs for both exporters and buyers,” Wahab stated. Despite the challenges, industry leaders see a silver lining. Competing East Asian economies, such as Vietnam (46%) and Cambodia (49%), face even steeper tariffs, potentially making India a more attractive sourcing destination.
Israr Ahmed, vice-president of the Federation of Indian Export Organisations (FIEO), believes this could enhance India’s global standing. “With these tariffs, interest in India is likely to grow, and we expect major brands to shift sourcing here, potentially boosting export orders,” Ahmed said.
Textile industry leaders also echo this optimism. Prabhu Dhamodharan, convenor of the Indian Texpreneurs Federation (ITF), pointed out that India’s 26% tariff is significantly lower than Vietnam (46%), Sri Lanka (44%), Bangladesh (37%), and China (34%), improving its cost competitiveness.
A Sakthivel, vice-chairman of Apparel Export Promotion Council (AEPC), noted that an additional ad valorem duty will take effect from April 9. With 35% of India’s apparel exports going to the US, the 26% tariff could impact competitiveness.
Turkey and Brazil, facing only a 10% tariff, may become more attractive sourcing options. However, India still retains a tariff advantage over Sri Lanka, Vietnam, Cambodia, Bangladesh, and China, which may help offset some negative effects.