- Textile industry may see temporary job loss
The 50% punitive tariff by the U.S. is expected to hurt the textiles sector, particularly MSMEs, leading to a short-term impact on employment. The U.S. is the largest importer of Indian textiles and apparel, accounting for 29% of exports in this sector. Sonal Arora from GI Group Holding noted that while the overall macroeconomic impact on India’s GDP will be limited, the textile sector, which employs 4.5 crore people, is already under pressure. She compared India’s new 50% tariff to the 20% tariffs on Vietnam and Bangladesh, stating that Indian exports to the US only represent 6% of the country’s overall textile industry.
- Cotton duty exemption extended
In response to the U.S. tariff on textiles, the Indian government has extended an import duty exemption on cotton for three months, until the end of December. This move, while not fully offsetting losses, was welcomed by textile hubs like Coimbatore and Tiruppur, as it is expected to help cool down yarn prices. The Southern India Mills’ Association (SIMA) called the decision “timely relief” and urged exporters to focus on finding new markets and strengthening their domestic presence.
- TN’s leather & seafood exporters stumped
Leather and seafood exporters in Tamil Nadu are also facing a major crisis due to the new tariffs. Leather manufacturers, who supply 30% of India’s leather exports to the U.S., are seeing buyers demand heavy discounts and hold back new orders. Similarly, seafood exporters, particularly those exporting shrimp from Tamil Nadu, are also facing demands for large discounts and a hold on new orders from U.S. buyers. KVV Mohanan of the Seafood Exporters Association of India warned that layoffs are likely if the government does not intervene with measures like reinstating the 3% interest subvention.
- Diamond polishers face 28-30% revenue loss in FY26
The Indian natural diamond polishing industry is projected to see a steep 28-30% fall in revenues in the current fiscal year, from $16 billion in FY25 to about $12.50 billion. This decline is a result of the 50% U.S. tariff, which is made up of a 25% reciprocal tariff and a 25% penalty. The industry has already experienced a 40% decline in recent years due to falling prices and competition from lab-grown diamonds. An analysis by Crisil Ratings indicates that the low profit margins of diamond polishers will make it difficult to absorb the tariff, potentially eroding their operating margins by 50-100 basis points and pressuring their credit profiles.