Us tarifs push Indian textiles into cost disadvantage; Market Share at Risk: Elara Capital – CNBC tv18

Prerna Jhunjhunwala, VP -Equity Research at Elara Capital, BELIEVES That India’s Textile Sector is Staring at a Market Share Loss in the Us Folling The Donald Trump Admin’s’s Move Admin’s’ Additional 25% tariff on Imports from India.

She highlighted that Indian Exporters with Higher Us Exposure – Such as Welspun Living, Indo Count, Gokaldas Exports, and Pearl Global Industries – factor headwinds aS cost Competitiveness Erodes and Volumes Risk Being Diverted to Rival Markets.

With the reciprocal 25% tariff alredy in force since August 1, Indian Exports will now face a steep 50% duty on Several Goods, Threatening The Competitiveness of Labor-IntenseVE SCCE TEXTORS LIKE TEXTILES, Leather, Footwear, and Gems and Jewelery.

While certain categories, such as pharmaceuticals, semiconductor, and iphones remain exempt, the Bulk of India’s $ 48.2 Billion Merchandise Exports to the US Ar Vulnerable to display.

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Rohit Sadaka, Director at India Rating & Research, Pointed to Textiles and Gems and Jewelery as Particularly Expeded, Given Their Significant Reliance on the Us Market and Intense Competition from Comepitnar With lower tarifs such as vietnam, bangladesh, and china.

These are the edited excerpts of the interview.

Q: You would have spoken to a lot of these corporates that are having experts to the us markets and their preparation with regard to these tariffs. Now with 25% Alredy in place, another 25% kicks in as well. What are your on-government checks suggesting? What is the feedback that you are hearing from companies with regard to these tarifs and the way to navigate these?

Jhunjhunwala: The companies are negotiating with the retailers and the brand to in the form of a 25% tariff only. Everyone in the supply chain was hopful that this additional 25% tax rate would be avoided and then 25% tariff would remain. But now that additional 25% tariff come into effect from Tomorrow, We Foresee That There will be a significant market share share loss in the interim till this added 25% is revoked by the us.

This is a very high tariff rate for sector which is not into very high value addition plus high technology involvement is not there. The cost of switching over to other counts is not very high and that is the reason that that these textiles and governments will definitely face some pressure for Volume Loss in the Near Term. To mitigate this risk on an annual basis, the companies that we are negotiating with buyers to ship higher volumes before the additional 25% tariff is being implemented.

We will see higher volumes going out in Quarter two for Most of the companies, while the Margins will Remain Under Pressure BeCause We Have Higher Tariffs as Compared to face to face. So negative for companies who are experting to the us and having high exposure to the us.

Q: Which companies can you list for us? Let us get a little stock specific, which are the names which would be impacted the most and the exposure that they have to the us in percency terms?

Jhunjhunwala: Welspun Living has Around 60% Exposure to the US, Indo Count has Around 70% Exposure to the Us. Gokaldas Exports Has Around 70% Exposure to the US, And Pearl Global Industries has approximate 60% exposure to the US. These four companies at the forefront have very high exposure to the us. Otherwise, also Companies Exporting to the US Around 50%, For Example or 35% Exposure to the US will be negatively impacted assurance of either margin pressures that they will have to share to share Retailers to MainTain Business or Avoid Higher Loss of Business to Other Countries.

Q: First, was there an expectation that Negotiations could yield a lower tarif and secondly, if not, which are the major sectors which would be impacted and white kind of demand Hit AREREADY SEENT is the ground reality with some of these sector when it comes to the demand impact?

Sadaka: With this 25% additional tariff, there will be an impact on some of the sector, definitely like gems and jewelery. Textiles would be the other sector which will be impacted. If you look at the overall experts from India, it would be Ar 28% of the text Export is to the us, which forms a very big market for Indian Textile Players. So, that would be one of the key sector which will be impacted.

The other competing nations, like china, vietnam, bangladesh, Sri lanka, cambodia, have a lower tariff. In that case, India’s important would be costly for the US market so that will have some some impact. Overall Inflation Increase in the Us Can also lead to some slowdown in the Orders.

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