Inside Indian factories struck by prices of 50% of the United States

A strange silence can be held above the N Krishnamurther clothing unit in Tiruppur, one of the largest textile export centers in India.

Only a fraction of approximately 200 industrial sewing machines on the ground is in service, because workers place the last of the children’s clothing orders of the season for some of the largest American retailers.

At one end of the room, heaps of fabric samples for new designs bring together dust – victims of the steep prices of 50% of US President Donald Trump on India, which take place from Wednesday.

India is a large exporter of goods, including clothing, shrimp and jewels and jewelry in the United States. Commerce experts claim that high prices – including a 25% penalty for the purchase of Russian oil and weapons – are similar to an embargo on Indian products.

BBC correspondents visited key export centers through India to assess how commercial uncertainties have an impact on business owners and livelihoods.

Through Tiruppur – which contributes to a third of $ 16 billion exports in India (11.93 billion pounds sterling) of ready -to -wear clothing to brands such as Target, Walmart, Gap and Zara – There is acute anxiety about what the future has in store for us.

“September, nothing remains to do,” said Krishnamurthy, because customers have interrupted all orders.

He recently had to suspend his expansion plans and set up nearly 250 new workers who were hired before the taxation of prices.

The moment of the announcement has worsened things because almost half of the annual sales for most export companies are made during this period, as Christmas approaches.

Now, these units bet on the internal market and during the next season of Diwali in India, to survive.

In another factory that makes underwear, we have seen an inventory of nearly $ 1 million, intended for American stores, stacked without takers.

“We hoped that India will have a business agreement with the United States. The whole production chain was frozen last month. How will I pay the workers if it continues?” Siva Subramaniam, the owner of Raft Garments, told the BBC.

At a pricing rate of 50%, an Indian manufacturing shirt which once sold at $ 10 will cost US buyers $ 16.4 – much more expensive than $ 14.2 from China, $ 13.2 from Bangladesh or $ 12 in Vietnam.

Even if the tasks facilitate 25%, India will be less competitive than its Asian peers.

To soften the blow, the government has announced certain measures – a suspension of import duties on raw materials, for example. Trade discussions with other countries have also grown to diversify the markets. But many fear that it is too little, too late.

“We can expect the diversion of trade, American buyers moving to Mexico, Vietnam and Bangladesh,” said Ajay Srivastava of the Trade Research Initiative.

About 1,200 km (745 miles) from a distance, in an export area in Mumbai, hundreds of workers are busy polishing and packing diamonds, part of the business and jewelry of $ 10 billion in India.

But jewelry brands here are nervous about the potential impact of prices on their sales in September and October – when 3 to 4 billion dollars in jewelry are shipped to the United States.

Although India’s new commercial partnerships with the United Kingdom and Australia have opened up opportunities, years of effort to develop a presence in the United States could be canceled in months, fears Adil Kotwal of the creation jewelry, which sells 90% of its diamond jewelry in the United States.

He works on thin margins of 3 to 4%, so even an additional rate of 10% is difficult to maintain. “Who can absorb these prices? Even American retailers will not (do),” Kotwal told the BBC.

Kotwal supplies its Surat City stones in the neighboring state of Gujarat. In Surat, the global diamond cutting and polishing center, a crisis is preparing long before the prices hit due to the drop in demand and competition from the laboratory diamonds.

And now the prices are a double blow.

American customers have disappeared and factories that have supported nearly five million livelihoods now operate for barely 15 days a month. Hundreds of contract workers have been sent to indefinite leave.

Inside a weakly lit diamond polishing unit on the outskirts of the city, rows of dusty and unused tables extend in silence. Nearby, broken processors are dispersed.

“This place burst,” said a worker. “Many people have been recently dismissed. We don’t know what will happen to us.”

Shailesh Mangokia, who built the unit, said that he once employed 300 workers. There are only 70 left. The number of diamonds polished each month went from 2,000 to barely 300.

Local union leaders such as Bhaveveh Tank say that workers are faced here with “a decrease in wages, forced leave and a narrowing of monthly income”.

Many producers of shrimp from India, on the other hand, plan to move to other products to survive the blow. India is one of the largest shrimp exporters in the world – and the United States is a major market.

In addition to other prices, total shrimp rates are now more than 60% – a body blow for the sector because prices have dropped from $ 0.60 to 0.72 per kilo since the announcement of prices and should fall more once the 50% rate enters.

“It is the high season for American buyers who are preparing for Christmas and New Year sales. Farmers here are just starting their new culture cycle.

The cover operators claim to have considerably reduced the production of shrimp larvae accordingly.

“Previously, we have produced an average of 100 million shrimp larvae per year. Now we don’t even reach 60 to 70 million,” said Varma de Srimannarayana Hatcheries in the city of Veeravasaram.

All of this could directly affect the livelihoods of half a million shrimp producers and 2.5 million people indirectly, according to estimates.

In a country already in shock of an extended crisis in the creation of jobs, they are disturbing personalities.

For the moment, the dead end between India and the United States continues. If anything, the environment for new commercial negotiations has deteriorated considerably in the past weeks.

The latest series of commercial negotiations that should start in Delhi this week would have been canceled, and US officials have doubled their criticisms of India, accusing it of “reconciling” in Beijing and being a “laundromat” for Russia.

“The future of India-US for talks now depends strongly on the priorities of the Trump administration, servants and those involving Russia and China, among others,” Gopal Naddur told the Asia group consulting company at the BBC.

“For decision -makers and business leaders of India, the mantra should be: increase autonomy, diversify and leave no stone not returned.”

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