36 pc of Textile Exporters See Over 50 pc Turnover Drop
The US accounts for 28 per cent of India’s textile and apparel exports and the tariffs have significantly undermined the competitiveness of Indian exports
Chennai: About 36 per cent of textile and apparel exporters to the US have witnessed over 50 per cent drop in turnover since the reciprocal and penalty tariffs came into effect. Another 28 per cent have seen more than 25 per cent drop. Sixty-two per cent exporters are offering discounts to US buyers.
The US accounts for 28 per cent of India’s textile and apparel exports and the tariffs have significantly undermined the competitiveness of Indian exports.
About 36 per cent of the exporters who responded to a survey done by the Confederation of Indian Textile Industry (CITI) reported that their turnover has been reduced by more than 50 per cent. Another 28 per cent saw a drop between 25 and 50 per cent, and yet another 28 per cent saw a decline between 10 to 25 per cent.
The major factors contributing to this decline are discounts provided to the US buyers, cancellation or postponement of orders, and reduction in order volumes.
About 85 per cent of the respondents have reported an inventory buildup due to the reduction in orders. About 62 per cent of the respondents were forced to offer a discount to their buyers, majority of which are offering it to the tune of 25 per cent to remain competitive.
Among textile exporters, 69 per cent are micro, small and medium enterprises. They are engaged in deemed as well as direct exports.
Further, 82 per cent of exporters reported experiencing an extended credit cycle across the supply chain due to 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. Around 40 per cent reported a rise in working capital requirements by more than 30 per cent, further highlighting the growing financial stress within the sector.
Exporters have urged the government to announce a moratorium on repayment of existing loans, introduction of collateral-free loans to help address the surge in working capital requirements and enhancement of raw material competitiveness by removing import barriers such as QCOs, import duties, and related restrictions.
