Desi Talk

www.desitalk.com – that’s all you need to know 4 US˨INDIA August 15, 2025 Indian Exporters Weigh Options To Deal With US Levy That’s ‘Worse Than Covid’ I ndian exporters who built their busi- nesses on Americans’ demand for affordable goods are redrawing their strategies and weighing alternatives to reduce the pain from US Presi- dent Donald Trump’s shock 50% levy on imports. Trump’s decision to double tariffs in the space of a week will make India-made apparels to generic drugs prohibitively ex- pensive and can heavily disrupt exports, if not bring them to a grinding halt for many smaller businesses. “This is worse than Covid for us,” said Lalit Thukral, founder of apparel exporter Twenty Second Miles, who fears the in- dustry will have to sell his goods at a loss and comparing the tariff-led disruption to the coronavirus pandemic. “At least, there seemed to be an end to it. This tariff situa- tion is just getting worse.” While escalating tariffs pose an existen- tial threat to small enterprises like Twenty Second Miles, the larger ones are consid- ering coping tactics including relocating production lines to countries with a lower tariff barrier, tapping buyers in other geographies and exploring acquisitions in the US. Gokaldas Exports Ltd., one of India’s largest apparel exporters that earns about 70% of its revenue from the US, plans to ramp up production in its factories in Kenya and Ethiopia which face just a 10% US levy. “Africa is looking like a good source at the moment,” Gokaldas’ Managing Director Sivaramakrishnan Ganapathi said in an interview. “We are seeing a huge amount of inquiries for production from that region from American customers.” GUT PUNCH The mitigating strategies will be a gut punch for Prime Minister Narendra Modi’s flagship ‘Make in India’ initiative and puncture any prospects to position India as an alternative manufacturing hotspot to China. Economists forecast that Trump tariffs could clip India’s gross domestic product by as much as 1%. Trump has peppered his tariff on- slaught with jibes about how the South Asian nation’s trade barriers were “obnox- ious” and its economy “dead” – remarks that have drawn counter from India’s central bank. But businesses are hoping for more than just retorts. Businesses thought “there would be more predictability,” according to Rohit Kumar, founding partner at public policy consultancy The Quantum Hub. “In the short term, this threatens our China+1 strategy that India was position- ing itself to benefit from. In the longer term, even this rerouting may not work for longer as policies could change,” Kumar said, referring to companies trying to recast supply chains. The revised US levy announced as a penalty for India’s purchases of Russian oil are set to take effect within 21 days, providing time for hectic parlays between New Delhi andWashington DC. In the meantime, companies are work- ing on hedging strategies. Tata Group’s Titan Ltd., which sells jewelry, is consider- ing shifting some manufacturing to the Middle East which has lower duties on shipments into the US, Reuters reported Tuesday. Kalyan Jewellers India Ltd. may consider expanding its manufacturing operations in Dubai to navigate US tariffs, Executive Director Ramesh Kalyanaraman said Friday in an interview with Bloom- berg TV. DIRE THREATS While Indian drugmakers are awaiting clarity on sectoral tariffs imposed by the US, many of them have already begun scenario planning given Trump’s dire threats. “We’ll be putting a initially small tariff on pharmaceuticals, but in one year – one and a half years, maximum – it’s going to go to 150% and then it’s going to go to 250% because we want pharmaceuticals made in our country,” Trump had said Tuesday in an interview on CNBC. Alembic Pharmaceuticals Ltd., which earns about 30% of its revenue from the US, sees acquisitions there as a way of boosting manufacturing in the region, its Joint Managing Director Pranav Amin, told Bloomberg News. Aurobindo Pharma Ltd., which counts on the US for nearly 50% of its sales, announced the acquisition of Indiana- based Lannett Co. on July 30 in a deal that will help expand its US manufacturing footprint. About $3 billion worth of auto compo- nents exports will be affected, according to data from the Automotive Component Manufacturers Association. A 50% tariff also makes India the worse off among its peers such as Vietnam, Indonesia and China. Firms elsewhere are also actively try- ing to lure non-American customers to diversify their customer base and market presence. SELL ELSEWHERE Welspun Living Ltd., which sells home fabrics in the US, told analysts last week that it is looking at the UK, European Union, Middle East, Australia, New Zea- land and Japan to reduce reliance on the American market. SNQS International, based in the textile hub of Tiruppur in southern India, gets about 20% of its business from the US but is now looking to double down on Euro- pean nations, according to its founder V. Elangovan. Larger textile manufacturers are also grabbing smaller, low-value orders to keep their factories running and avoid shut- downs, Thukral of Twenty Second Miles said. This risks crowding out the smaller firms. CALLS FOR SUPPORT Indian trade bodies across affected industries, including apparel, gems and jewelry, and shrimps, are ramping up calls of support from the Modi government. The Confederation of Indian Textile Industry wants the government to “fast track” measures to limit the hardship faced by local apparel exporters while an industry body for shrimp exporters is seeking export incentive programs. The Gems and Jewellery Export Promo- tion Council wants duty drawbacks, pre- shipment loans and deferring interest on working capital facilities, Chairman Kirit Bhansali said in a statement. - Bloombefg By Satviki Sanjay PHOTO:Dhiraj Singh/Bloomberg Employees inspect and polish diamonds at a workshop in Surat, Gujarat, India. Air India Suspends Delhi-Washington Flights Due To Plane Shortages, Pakistan Airspace Ban A ir India will suspend services between New Delhi andWashington, D.C. from September due to aircraft shortages caused by upgrades to its Boeing planes and as Pakistan’s airspace ban for Indian carriers affects its international routes. The suspension will mean there are no flights between the two capital cities by an Indian airline, and comes amid rising tensions over U.S. President Donald Trump’s high tariffs on Indian imports. Air India, acquired by the Tata Group from the gov- ernment in 2022, said on Monday that 26 of its Boeing 787-8 aircraft were being retrofitted to enhance customer experience, which would reduce aircraft availability until at least the end of 2026. “The suspension is primarily driven by the planned shortfall in Air India’s fleet,” it said in a statement. “That, coupled with the continued closure of airspace over Paki- stan, impacts the airline’s long-haul operations.” India and Pakistan closed their airspaces to each other days after relations nosedived following a fatal attack on civilians in Indian Kashmir. New Delhi has blamed Islam- abad for the attack, which Islamabad denies. Air India sees Pakistan’s airspace ban costing it $600 million over 12 months, Reuters has previously reported. The suspension ofWashington-Delhi flights also comes as Air India faces heightened regulatory scrutiny after a June crash of one of its Boeing planes in Ahmed- abad killed 260 people. Air India said passengers would have the option to choose flights toWashington, D.C., with layovers in New York, Newark, Chicago and San Francisco with the air- line’s partners Alaska Airlines, United Airlines and Delta Air Lines. - Reuters