In brief
The recent introduction of 50% tariffs by the U.S. on Indian goods is causing widespread disruption. Factories in Tiruppur and Surat, which are crucial to India's garment and diamond exports, are experiencing severe declines in production and order cancellations. Business owners and workers face uncertainty as they grapple with potential layoffs and diminished income in an already struggling economy.
An eerie silence hangs over N Krishnamurthy's garment manufacturing unit in Tiruppur, one of India's largest textile export hubs. Only a fraction of some 200 industrial sewing machines on the floor are in operation, as workers make the last of the season's children's garment orders for some of the biggest U.S. retailers. At one end of the room, piles of fabric samples for new designs are gathering dust - casualties of U.S. President Donald Trump's steep 50% tariffs on India, set to kick in from Wednesday. India is a major exporter of goods, including garments, shrimp, and gems and jewelry, to the U.S. Trade experts say the high tariffs - including a 25% penalty for buying Russian oil and weapons - are akin to an embargo on Indian goods. BBC correspondents visited key export hubs across India to assess how the trade uncertainties are impacting business owners and livelihoods. Across Tiruppur - which contributes to a third of India's $16 billion exports of ready-to-wear garments to brands such as Target, Walmart, Gap, and Zara - there's acute anxiety about what the future holds. September onwards, there may be nothing left to do, Krishnamurthy said, as clients have paused all orders. He recently had to pause his expansion plans and bench nearly 250 new workers who were hired before the tariffs were imposed. The timing of the announcement has made things worse because nearly half of annual sales for most export businesses are made during this period, in the run-up to Christmas. Now these units are banking on the domestic market and on the upcoming Diwali season in India to survive. At another factory that makes underwear, we saw inventory of nearly $1 million, meant for U.S. stores, piled up with no takers. We were hoping India will ink a trade deal with the U.S. The entire production chain was frozen last month. How will I pay workers if this continues? Siva Subramaniam, the owner of Raft Garments, told the BBC. At a 50% tariff rate, an Indian-made shirt that once sold for $10 will cost U.S. buyers $16.4 - far costlier than $14.2 from China, $13.2 from Bangladesh, or $12 from Vietnam. Even if duties ease to 25%, India will be less competitive than its Asian peers. To soften the blow, the government has announced some measures - a suspension of import duties on raw materials, for instance. Trade talks with other countries have also gathered momentum to diversify markets. But many fear this is too little, too late. We can expect the diversion of trade, with U.S. buyers moving to Mexico, Vietnam, and Bangladesh, said Ajay Srivastava of the Global Trade Research Initiative.Some 1,200 km away, at an export zone in Mumbai, hundreds of workers are busy polishing and packing diamonds, part of India's $10 billion gems and jewelry exports trade. But jewelry brands here are nervous about the potential impact of the tariffs on their sales during September and October - when $3-4 billion worth of jewelry gets shipped to the U.S. While India's new trade partnerships with the UK and Australia have opened up opportunities, years of effort to build a presence in the U.S. could be undone in months, fears Adil Kotwal of Creation Jewelry, who sells 90% of his diamond-studded jewels in the U.S. He works on thin margins of 3-4%, so even a 10% additional tariff rate is difficult to sustain. Who can absorb these tariffs? Even U.S. retailers will not be able to [do so], Kotwal told the BBC. Kotwal sources his stones from Surat city in neighboring Gujarat state. In Surat, the world's diamond-cutting and polishing hub, a crisis has been brewing long before the tariffs hit due to declining global demand and competition from lab-grown diamonds. And now the tariffs are a double whammy. American customers have vanished and factories that sustained nearly five million livelihoods are now operating for barely 15 days every month. Hundreds of contract workers have been sent on indefinite leave. Inside a dimly lit diamond polishing unit on the city's outskirts, rows of dusty, unused tables stretch out in silence. Nearby, broken CPUs lie scattered. This place used to be buzzing, says a worker. Many people were fired recently. We don't know what will happen to us. Shailesh Mangukia, who built the unit, says he once employed 300 workers. Now only 70 remain. The number of diamonds polished every month has plunged from 2,000 to barely 300. Local trade union leaders such as Bhavesh Tank say workers here face decreasing wages, forced leave, and shrinking monthly incomes. Hatchery operators say they've significantly reduced shrimp larvae production as a result. Previously, we produced an average of 100 million shrimp larvae annually. Now, we're not even reaching 60-70 million, said MS Varma of Srimannarayana Hatcheries in Veeravasaram town. All of this could affect the livelihoods of half a million shrimp farmers directly and another 2.5 million indirectly, according to estimates. In a country already reeling from a protracted crisis of job creation, these are worrying figures.
