Trump's penalty talks create unease in Indian textile industry

The move has sparked concerns across sectors in India, especially after Trump also mentioned of an additional, unspecified penalty related to India’s ongoing trade relations with Russia, specifically its purchases of crude oil.

While the announcement was made without detailing the nature of the additional penalty, industry leaders and policymakers are concerned over its ramifications and long-term implications.

Reacting to the latest development, India’s Ministry of Commerce and Industry issued an official response, as reported by various media outlets. The statement emphasised that the Indian Government is closely examining the implications of the US President’s announcement.

“The Government is studying its implications. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective,” the ministry reportedly underlined.

The statement also reassured stakeholders that national interests would be protected. “The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs. The Government will take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest Comprehensive Economic and Trade Agreement with the UK,” the ministry reportedly added.

Adding another dimension, US Secretary of State Marco Rubio, just a day after Trump’s tariff announcement, underlined Washington’s dissatisfaction with India’s continuing imports from Russia, as reported in certain sections of the media.

“India’s purchase of oil from Russia is most certainly a point of irritation,” Rubio reportedly said speaking to a radio channel.

Experts are thus viewing Trump’s tariff imposition not just through the lens of protectionism, but as part of a broader geopolitical agenda. Some analysts believe the punitive measures reflect the US’ discomfort with India’s increasing strategic autonomy and its deepening economic engagement with Russia.

Of particular concern to Indian exporters is the ambiguity surrounding the “unspecified penalty” mentioned by Trump. The lack of clarity on this additional measure has created unease in the business circles.

Sudhir Sekhri, chairman of the Apparel Export Promotion Council (AEPC), reflected this sentiment, stating, “The penalty is a grey area, and we hope the Government of India (GOI) will negotiate this with the US…”

Echoing similar concerns, Rajeev Gupta, joint managing director of RSWM Ltd, earlier told Fibre2Fashion, “Indian entrepreneurs and manufacturers are resilient, and we are confident that business momentum will be consistently rising with planned strategies. What remains crucial is clarity on the tariff position against China,” even as he added, “A more pressing concern is the undefined penalty clause linked to India’s ties with Russia, which adds a layer of uncertainty.”

The timing of this development is critical, as both countries have been actively engaged in negotiations for a mutually beneficial trade agreement.

India’s recent efforts to diversify trade relationships, including the signing of the Comprehensive Economic and Trade Agreement (CETA) with the UK, many feel, signals a broader strategy to reduce dependence on any one market even as they added the US nonetheless remains one of India’s largest trading partners, and any disruption in this relationship could have far-reaching implications for key export sectors such as textiles.

“The Free Trade Agreement with the UK opens up varied opportunities and is a welcoming move,” claimed an industry player interacting with Fibre2Fashion, who expressed apprehensions over the penalty ramifications if not sorted out soon.

However, as things stand now, the Indian exporters seem to be adopting a cautious approach, a wait and watch policy to see how things unfold in the days to come as the steep duty imposed by US could hurt nearly half of India’s exports, as per some estimates, adding to which is now the threat of additional penalty.

ALCHEMPro News Desk (DR)