US tariffs threaten India's carpet industry | BBC News

Key Concepts

• Tariffs: Taxes imposed on imported goods.
• Labor-Intensive Industry: An industry that requires a large workforce relative to its output.
• Handloom Weaving: A traditional method of weaving fabric using hand-operated looms.
• Export Market: The market for goods and services sold to other countries.
• Energy Security: The assurance of sufficient and stable supply of energy.
• US-India Trade Deal: Negotiations and agreements concerning trade between the United States and India.

Impact of US Tariffs on India's Carpet Sector

This segment details the severe repercussions of American tariffs on India's carpet industry, a significant source of employment and revenue.

• Scale of the Industry:
  • Employs over 2.5 million people.
  • Generated a turnover of approximately $1.8 billion last year.
  • Involves artisans in all stages: spinning yarn, designing patterns, and weaving on power looms.
• Immediate Consequences of Tariffs:
  • Imposed within the last two months.
  • Resulted in the loss of over 100,000 jobs.
  • Wages have decreased for artisans.
  • Orders have dried up.
  • Artisans are forced to take loans.
  • Some are considering abandoning the craft for urban employment.
• Geographic Focus:
  • The report highlights a weaver's village in Uttar Pradesh, where handloom operations are prevalent.
  • At least 3 million people in this region alone are engaged in similar work, including women and rural artisans.
• Manufacturer's Perspective (Mr. Bilal Kureshi, Carpet Manufacturer):
  • Order Hold: 70% of manufactured carpets intended for export are currently held up.
  • Payment Issues: Buyers are not making payments due to the uncertainty caused by tariffs.
  • Artisan Payment: Inability to pay artisans is a direct consequence of delayed buyer payments.
  • US Market Dominance: America is a crucial market, accounting for 60% of India's carpet exports.
  • Replaceability: Replacing the US market is deemed impossible in the current scenario due to its size and the specific nature of Indian handmade carpets.
• Legacy and Survival: The carpet industry represents a generational craft, and its survival is linked to the economic well-being of these communities.

Underlying Causes and Broader Trade Context

The discussion connects the tariffs to broader geopolitical and trade dynamics between the US and India.

• Reason for Indian Tariffs: India's imposition of tariffs is linked to its purchase of Russian crude oil, which India deems essential for its energy security.
• US Demands: The US has also expressed concerns about high tariffs on its dairy and agricultural products in India.
• US-India Trade Deal Hopes:
  • There were expectations that President Trump's trip to Asia might lead to a meeting with Prime Minister Modi to resolve these trade disputes.
  • However, these remain only hopes, with no concrete deal announced yet.
• Wider Impact:
  • Beyond carpets, other labor-intensive industries like leather and textiles are facing similar challenges.
  • The rural economy of India, particularly in states like Uttar Pradesh, is experiencing a significant blow.

Conclusion

The report underscores the tangible and detrimental impact of US tariffs on India's labor-intensive industries, particularly the carpet sector. The loss of jobs, reduced wages, and the threat to a generational craft are direct consequences of trade disputes, highlighting the human cost of political policies. The lack of a resolution to the US-India trade deal leaves numerous industries vulnerable, with the rural economy bearing the brunt of these economic pressures.