India’s exports to US plunge under tariffsーNHK WORLD-JAPAN NEWS

Key Concepts:

• Tariffs
• Export Industries (Carpets, Diamonds)
• US-India Trade Relations
• Russian Oil Imports
• Economic Impact on Workers and Businesses
• Trade Negotiations

Impact of US Tariffs on Indian Export Industries

In late August, the US administration imposed a significant tariff of 50% on imports from India, marking the highest such rate globally. This action was attributed to India's continued purchases of Russian oil. The US is India's largest trading partner, with exports valued at $86 billion in fiscal year 2024. NHK World's Abishek Julia reports on the severe repercussions this has had on workers and owners within India's export sectors.

The Carpet Industry in Badi

The city of Badi, renowned for its hand-knotted rug industry, has been particularly hard-hit. One company in Badi, which previously exported 95% of its carpets to the US, has seen new orders from American business partners cease entirely following the imposition of these tariffs. The company currently has approximately 8,000 carpets in stock. To mitigate costs, the manufacturer has been compelled to reduce employees' workdays by half. The owner expressed deep concern about the tariff's impact on local outsourced workers, stating that carpet businesses are the primary source of survival for the village population. He estimates that over 2,000 weavers are currently not receiving adequate work.

Worker Perspectives in the Carpet Sector

Saddam Hussein, a weaver from a nearby village, corroborated this, reporting a drastic decline in his orders. He fears that the piece he is currently working on might be his last, contemplating a move to cities like Mumbai or Delhi to find any available work.

The Diamond Processing Industry in Surat

The diamond processing industry has experienced an even more severe downturn. Surat, a western Indian city, is a global hub for diamond cutting and polishing, handling three-quarters of the world's output in this sector. Chetar Sassa, who had been a diamond polisher for nearly seven years, was abruptly laid off after the 50% tariff announcement, receiving only half a month's salary. While he has found alternative employment, his current earnings are less than half of his previous salary, making him unable to pay his children's school fees. He expressed his distress and his hope for a swift resolution to the trade disruption.

Business Impact in the Diamond Sector

The layoffs are a direct consequence of the declining performance of local businesses. One diamond processor, which previously exported half of its products to the US, has had its orders put on hold due to the tariffs. This has resulted in approximately 400 employees leaving the company. The firm's co-owner warned that the company could face bankruptcy within a few years if the current situation persists, stating, "Obviously after one or two months we have to uh think uh about production cutting more. If this type of scenario like tariffs and all the things will continue in future I think whole industry will shut down."

Ongoing Trade Negotiations and Potential Solutions

Two months into the implementation of these tariffs, they are increasingly impacting India's traditional industries. Abishek Julia, reporting from New Delhi, confirmed that businesses across various sectors are feeling the effects, with the impact escalating the longer the situation continues. Companies are resorting to workforce reductions and scaling back operations.

The governments of India and the US are actively engaged in negotiations to resolve the tariff dispute. The Indian government is demanding the removal of the tariffs, deeming them "unfair and unreasonable." Prime Minister Narendra Modi has also indicated that India will not open its agriculture and dairy markets to US products.

In parallel, India is exploring diversification of its trading partners, including China. US President Donald Trump has referred to India as the "tariff king." Despite several rounds of talks yielding limited progress, recent days have shown some positive signs, with both sides suggesting they may be entering the final phase of negotiations.

Experts suggest that India has several potential concessions it could offer, such as reducing oil imports from Russia or increasing its purchase of energy from the US. A resolution is considered crucial for maintaining the strong economic and defense ties between the two nations. However, for the businesses and workers currently facing hardship, the immediate priority is an end to their struggles.