US Tariffs: India Could Lose Major Share Of Textile Exports Over 3-6 Months, Says Pearl Global MD

India's textile and apparel industry is facing an existential threat following the imposition of a crippling 50% tariff by the United States, according to Pallab Banerjee, Managing Director of Pearl Global Industries Ltd.

“If India remains at 50% even for three to six months, I fear that India will lose a major share of this business. The $6 billion of apparel exports may come down to about 10% or 15%,” he told NDTV Profit. 

According to Banerjee, US brands and retailers are now presenting Indian exporters with a stark ultimatum: either absorb the massive cost increase or risk losing business to competing nations.

“They are putting two conditions on the apparel manufacturers of India. Either absorb this tariff, which means we reduce our selling price by about 16% to avoid this 25% tariff. Or they are pushing us to shift the US manufacturing to other countries,” the top executive said.

He said that while a company like Pearl Global Industries, which has manufacturing operations across countries such as Bangladesh, Vietnam, Indonesia and Guatemala, can shift its manufacturing outside of India, those who can’t will suffer losses. 

“People who are not able to do either of these are going to lose the business.”

“Big businesses like ours and some others, we may absorb this for one season, but we cannot do so for a prolonged period because none of the businesses have this kind of margin to continue like this,” he explained.

Underlining the urgency of the matter, he sought an immediate resolution. Otherwise, the Indian textile exports will suffer long-lasting damage, according to the MD. 

“The most important part is that whatever has to be done has to be done now, immediately. If it is done after three months, we will lose a huge share of the market. And to bring that business back into India will take many years,” he said. 

Further, the timing of the tariff couldn’t be worse, as it’s going to hurt the new order inflows. “US places orders for spring and summer products at this point in time, which are supposed to be delivered in November, December onwards. And it's on sale, February, March onwards. Therefore, new order booking is definitely under pressure,” Banerjee said.

To reduce Pearl Global Industries’ exposure to the US, the company now needs to look at other markets.

“We have about 50% exposure of our total turnover in the US market. And India is about 25% of our total top line. So, almost 12.5% of our total top line is at risk. So, this business has to be replenished by some other markets like Australia, Japan, the European Union and UK. So, these are the places that we would be looking into.”

Though Trump has imposed tariffs on several countries, including India’s competitors in exporting textiles, India is at a serious disadvantage here as well. 

“If you look at competing countries like Bangladesh, Indonesia, Vietnam and all the other countries that manufacture apparel, India is not competitive by approximately 25 to 30% additional tariff,” the top official noted.

Shares of Pearl Global Industries closed 3.36% lower at Rs 1,235 apiece on the NSE, while the benchmark Nifty50 ended 0.85% lower at 24,500.9.