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The new reciprocal tariff structure announced by the US is aimed at creating a level playing field among trade partners, said Prabhu Dhamodharan, Convenor of the Coimbatore-based Indian Texpreneurs Federation (ITF). This presents a medium to long-term opportunity to boost export volumes, especially in the textiles and apparel sector to the US, he told businessline.
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Higher reciprocal tariffs on China, Vietnam, Bangladesh, and Indonesia may give India a competitive edge
Under the framework, India’s tariff rate is 26 per cent, which is significantly lower compared to many competing nations like Vietnam – 46 per cent; Sri Lanka – 44 per cent; Bangladesh – 37 per cent and China – 34 per cent. This gives India a clear advantage in cost competitiveness, he said.
In the past, India, Bangladesh and Vietnam faced similar tariff structures for cotton apparel exports. However, with the recent changes, India now holds a tariff advantage over these competing nations in comparative terms, potentially boosting its competitiveness in the US market for apparel export, he said.
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Industries most impacted include autos, semiconductors, retail, and e-commerce, while pharmaceuticals and energy remain exempt for now.
India is well-positioned to expand its market share in the US, driven by this tariff edge. The Ongoing trade negotiations may further enhance India’s position—particularly if India offers zero-duty import of cotton in return for sector-specific benefits in apparel exports. This move could prove to be a game changer for the industry, he said.
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FIEO: Trump’s 26% tariff will impact Indian exporters, but India better placed than peers
The US, India’s largest trading partner, has a significant trade surplus with India, and the FIEO is optimistic about the ongoing bilateral trade agreement negotiations aiming to provide relief from new tariffs
Some of the key factors to watch are the response of US consumers, including sentiment and consumption behaviour, will play a crucial role in shaping short-term export trends. There will be some turbulence at the retail level, which can be expected if the tariffs are implemented in full. The way each country retaliates and responds will also influence the next phase of trade dynamics, he said.
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