Team Siliconindia

• Gujarat's textile industry faces a major crisis after the US imposed a 50% tariff on Indian imports, threatening exports and employment in Ahmedabad and Surat.
• Industry leaders urge the Indian government to intervene, proposing measures such as a 10% export incentive to mitigate losses and redirect exports to other markets.
• The tariff disrupts a key trade channel worth over USD 10-12 billion annually, with potential ripple effects on allied industries and supply chains across the state.

Gujarat's textile industry is facing a serious crisis following the US' decision to impose a 50 percent tariff on all Indian imports a step that industry captains claim will compel several exporters to pack up shop. Industry players have called for the Centre to intervene and take adequate measures, such as a 10 per cent export incentive to partially counter the impact of the tariff.

The new tariff was introduced by US President Donald Trump in two phases a 25 percent tariff on all Indian imports and an additional penalty of 25 percent on India's ongoing Russian oil purchase. The decision was criticized by the Indian government and has declined to yield to American pressure to discontinue purchasing Russian crude.

The shock is especially severe for Gujarat, which hosts large textile centers Ahmedabad and Surat. India's overall textiles export to the US stands at USD 10-12 billion per year, of which Gujarat exports over 15 per cent.

Sandip Shah, co-chairman of the textile committee of the Gujarat Chamber of Commerce and Industry, explained "that exporters had initially expected the previous tariff of 25 percent to be revoked after negotiations. But with 50 per cent now in force, trade with America has become impossible, for textiles, the US market is now almost closed", he said.

According to Shah, this abrupt suspension of trade will generate acute liquidity issues. "If not set right at the earliest, it may take the industry at least six months to mend", he cautioned.

Most expect Surat, which is famous for its exports of synthetic fabrics, to be severely impacted. Ashish Gujarati, ex-president of the Southern Gujarat Chambers of Commerce and Industries, said the city contributes Rs 3,000, Rs 4,000 crore in direct exports to the US alone. "The indirect effect will be even greater  losses will reach Rs 10,000-Rs 12,000 crore as a number of allied industries are dependent on textiles", he said.

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For others, the only choice could be to close down or shift production. "If 50 per cent tariff is adopted, nobody will be in a position to export to the US, units will shut, artisans will lose employment, and many will need to migrate", said PR Kankaria, proprietor of Kankaria Textiles in Ahmedabad.

Industry associations are calling for the intervention of the central government. One of the proposals is for 10 per cent export incentive to counter the effect of the tariff and divert exports to other nations. "If we receive incentives, our exports to other markets can become triple, if not, everything comes to a halt",claimed Kankaria.

The US is the largest buyer of Indian textiles, and the loss of this market will have a trickle-down effect on supply chains from yarn producers to embroidery units. 

Although the industry has diversified its exports to the European, West Asian, and Latin American markets, the US market cannot be replaced in the short term. The sector looks towards immediate action. "We still hope that the government will take a decision in traders' interest so that losses are kept to minimum", Shah stated.

With the trade impasse now riding along with geopolitical tensions surrounding Russian oil, analysts caution that the fate of the textile sector may be as much dependent on foreign policy as on economic action.