Trump tariff wars: Home textile orders worth $ 2 bn in limbo

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Home textiles and made-ups, used for furnishing and decorating households, is the worst hit segment in the textile industry, with at least $2 billion (Rs 17,094 crore) worth of orders either being subject to negotiations or put on hold, according to the HomeTextile Exporters Welfare Association (HEWA).

This segment of the textile industry produces fabric-based items such as bed linen, towels, table mats, aprons, napkins, curtains and upholstery. Globally, India exports textiles worth nearly $37 billion annually, of which garments is the largest segment at $16 billion, followed by home textiles and made-ups which account for $10 billion.

However, home textiles is the worst hit because at least 60 percent ($6 billion) of the total $10 billion worth of exports goes to the United States. The garments segment, on the other hand, exports about 28 percent ($4 billion) to the US.

Emails from US buyers to Indian suppliers, reviewed by Moneycontrol, showed buyers threatening to cancel orders if not given a 50 percent discount. “Exporters have no option but to honour their discount demands as the US is the biggest market for our segment. We expect to expand our client base further in the US once the tariffs kick in, which would put India in an advantageous position compared to other majors in the industry such as China, Vietnam and Bangladesh,” said Vikas Singh Chauhan, Director, HEWA.

Trump slapped higher tariffs on competitor countries in the segment, with Vietnam staring at a 46 percent tariff, Bangladesh 37 percent, Cambodia 49 percent, and Pakistan 29 percent. In the absence of itemised taxes slapped by the US on China, the tariffs on the world's biggest exporter could range from 54 percent to 245 percent in the textile segment. Compared to these countries, India has been served with a tariff of 26 percent.

“We have also informed the Union government that nearly 90 percent exporters have been impacted by this tariff issue in our segment. My company alone has been hit as orders worth $2 million are stuck” said Chauhan who manufactures and exports bathing accessories, rugs, carpets through Skier Export and Import Private Limited.

An exporter who did not wish to be named said it is probably now time for the home textiles sector to diversify its market. “Seeing the geopolitical tensions, about a year and half ago itself I began to export to Russia. A good demand is developing there and the quality of our home furnishing items are also being recognised,” the exporter said.

Unlike the home textiles segment, India’s garment exports did not scale as was anticipated due to quality issues and the focus on local consumption. Nevertheless, the garments sector is also currently reeling under similar pressure with negotiations ranging from splitting the 10 percent baseline tariffs to a demand to subsume all of it in the contracted price.

“The garment industry’s profitability is typically at a very thin margin level. It is difficult for an exporter to realistically absorb the entire 10 percent. Negotiations are going on and discounts are being given on a case to case basis,” said Rahul Mehta, chief mentor at Clothing Manufacturers Association of India (CMAI) and Managing Director of Creative Garments Pvt. Ltd.

Mehta said a growing worry within the textile industry is how are American consumers going to react to the tariffs, in terms of a higher price for every product. “If their consumption goes down, then even if we offer the lowest costing goods, their overall consumption will go down and therefore, our demand will go down,” he said.

Gurudas Aras, strategic advisor to several textile companies, said that in the long run, the tariffs, despite negotiations, positions India in a better place than its competitors. “But will India be able to grab this opportunity is the moot question because in the past our country has missed the bus when it comes to the textile industry due to policy delays and segments within the industry working in silos,” he said.

India's textile industry is projected to grow to $350 billion by 2030, creating 3.5 crore jobs, according to Textiles Minister Giriraj Singh.