How will I pay workers?" Trump's 50% tariffs have a significant impact on Indian factories

 

In Tiruppur, one of India's major textile export hubs, N Krishnamurthy's clothing production facility is shrouded in an unsettling quiet.

As workers complete the final orders for children's clothing for some of the largest US shops, only a small portion of the 200 industrial sewing machines on the floor are in use.

As a result of US President Donald Trump's harsh 50% tariffs on India, which are scheduled to take effect on Wednesday, stacks of fabric samples for new designs are collecting dust at one end of the room.

India is a significant exporter of items to the United States, including jewelry, diamonds, shrimp, and clothing. The high tariffs, which include a 25% penalty for purchasing Russian weapons and oil, are comparable to an embargo on Indian commodities, according to trade experts.

In order to determine how the trade uncertainties are affecting business owners and livelihoods, BBC correspondents traveled to important export centers in India.

There is a great deal of concern about the future of Tiruppur, which accounts for one-third of India's $16 billion (£11.93 billion) in ready-to-wear clothing exports to stores like Target, Walmart, Gap, and Zara.

Krishnamurthy stated, "September onwards, there may be nothing left to do," because all orders had been paused by clients.

His expansion ambitions were recently put on hold, and he was forced to bench almost 250 new hires who had been hired prior to the tariffs.

Since the majority of export companies make over half of their yearly sales in the lead-up to Christmas, the announcement's timing has made matters worse.

In order to survive, these units are now depending on the Indian domestic market and the approaching Diwali season.

We observed approximately $1 million worth of merchandise, intended for US retailers, stacked up at another underwear manufacturer with no buyers.

"We hoped that India and the US would sign a trade agreement. Last month, the entire production chain was put on hold. If this keeps happening, how will I pay my employees? Raft Garments' owner, Siva Subramaniam, told the BBC.

An Indian-made blouse that was previously offered for $10 will now cost US consumers $16.4 at a 50% tariff rate, which is significantly more expensive than $14.2 from China, $13.2 from Bangladesh, or $12 from Vietnam.

India will be less competitive than its Asian counterparts even if levies are lowered to 25%.