The US is the largest market for India’s textile and apparel items, accounting for close to $11 billion of imports annually. Washington imposed the tariff following investigations conducted under Section 301 of the Trade Act by the Office of the US Trade Representative (USTR). The new long-term tariff replaced a temporary 10% surcharge that expired Friday.
“The tariff imposition on the issue of forced labour is deeply unfortunate, as it does not indicate an expiry date and causes reputational risks. CITI looks forward to the Indian government taking up this issue with the US, given the detrimental impact it could have on textile and apparel exports from India,” said the industry body’s chairman, Ashwin Chandran.
Under the newly announced Section 301 tariffs, India, Bangladesh, Cambodia and the UK are each subject to a tariff rate of 10%, whereas China and Vietnam face a higher additional tariff rate of 12.5%. This is in addition to the item-specific most-favoured nation tariffs.
“What could raise a serious challenge for Indian textile and apparel exporters is the fact that although many of our key competitors have also been subject to the same tariff rate, a window has been opened for textile and apparel exports from these countries to enter the US free of the Section 301 tariffs. This differential treatment risks diverting sourcing orders for textile and apparel items away from India,” said Chandran.