Following a string of heavy losses borne by Indian exporters particularly in the state of Tamil Nadu, the state’s chief minister MK Stalin on Thursday wrote a letter to Prime Minister Narendra Modi urging him to resolve the crisis triggered by recently imposed US Tariffs which has impacted a large share of Micro Small and Medium enterprises (MSMEs) across the country.
In the wake of major disruptions in bilateral trade brought out by hefty US tariffs on India under the present Trump administration, MK Stalin told PM Modi that present tariff rates are causing irreplaceable damage to businesses, particularly the textile ecosystem based in Tamil Nadu.
In his letter to PM Modi, Stalin said that the present US tariffs have resulted in daily revenue losses of Rs 60 crores for business in Tamil Nadu. Stalin further flagged more vulnerable sectors such as textile that have been held up by a string of MSMEs working together in the state.
Stalin’s claims
As per Stalin, a lot of businesses in the state ranging from the production of leather to general textiles are highly dependent on the US market and are facing order cancellations, production cuts. If things continue down the same pathway, SMEs across Tamil Nadu face the risk of widespread business closures unless a bilateral trade agreement is finalized swiftly.
Presenting evidence supporting his claims, Stalin said that export orders have dried up in Tiruppur district which is also known as the knitwear capital of the nation. “There’s been “a staggering wipe out” of 150 billion rupees in confirmed orders, forcing production cuts of up to 30%,” Stalin expressed in his letter to PM Modi.
Status of trade negotiations Impact of tariffs
Donald Trump, who is the 47th US President, slapped tariffs of 50% on Indian goods in August, one of the highest rates in the world threatening PM Modi’s manufacturing ambitions. This development proved to be a major hurdle for businesses across India since the United States served as India’s biggest export destination before the tariffs.
US Tariffs: Tamil Nadu Export Crisis
Despite months of negotiations and New Delhi officials expressing optimism of a deal soon, both sides remain locked in talks without any clear sign whether the tariffs will be lowered.
In his letter Stalin described the situation in Tamil Nadu as an “escalating crisis” and added that the resulting economic setback has pushed many small and medium enterprises to the “brink of collapse.”
Tamil Nadu contributes 28% to the nation’s textile exports and employs around 7.5 million people in the sector, Stalin said. The leather and footwear industry in the state contributes 40% to the nation’s sectoral exports and employs over one million workers. In this context, I implore you to prioritize resolution of this tariff issue through bilateral agreement at the earliest possible juncture,” he concluded.