India’s textile and clothing exporters have witnessed up to 50% drop in their US business due to the imposition of 50% duties by the Trump administration from August 27 with inventories piling up and orders getting delayed, according to an industry-wide survey.
The Confederation of Indian Textile Industry (CITI) said around one-third of the respondents in the survey have reported that turnover of their US business has reduced by more than 50%. Around 85% of them have reported inventory build-up due to reduction in orders.
About two-third of the respondents to the survey have said that they had to offer discounts to the tune of 25% to remain competitive.
Apart from demand for discounts and falling orders, around 82% of the exporters are also experiencing an extended credit cycle across the supply chain as a result of the recent impact. “Among them, over half indicated that the credit period has increased by 3 to 6 months, reflecting a substantial strain on liquidity.” a statement by CITI said.
Additionally, around 40% of respondents reported a rise in working capital requirements by more than 30%, further highlighting the growing financial stress within the sector.
The US is the single-biggest market for India’s textile and apparel, accounting for 28% of the total exports. In the last financial year the exports by the sector to the US stood at $ 11 billion.
To tide over the stress, the respondents have requested a moratorium on repayment of loans and collateral-free loans. The CITI has sought support for export diversification and market development initiatives, increasing the rates of tax refund under the Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL) schemes.
Other demands of the organisation include interest subvention and other financial relief measures to ease liquidity constraints, support in form of Focus Market Incentive Scheme for US bound shipments and reduction of corporate income tax or granting tax holidays.