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    Trump’s 25% tariff shock triggers panic among TN leather, gems & textile exporters

    US slapping fresh duties has left exporters gasping and bereft of ideas, as leather, garments and footwear exports face risk of losing ground

    Trump’s 25% tariff shock triggers panic among TN leather, gems & textile exporters
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    CHENNAI: Exporters of leather, gems and jewellery and textiles are shell-shocked and in panic mode, following Wednesday’s announcement by US President Donald Trump to impose 25 per cent additional import duty plus penalty on goods imported from India.

    Some of the key exporters, operating out of Tamil Nadu, whom DT Next spoke to, sounded gloomy and disappointed on the tariff front.

    Leather industry veteran M Rafeeque Ahmed, who is the chairperson of the Chennai-based Farida group, said while TN’s share in the $3.6 billion leather exports has gone up from 38 per cent to 40 per cent, the latest tariffs would definitely deter customers from placing orders, especially given that countries like Vietnam and Indonesia are in a much more favourable position than India.

    There is no logic in buying from India, he said, adding this decision has left exporters totally confused.

    “There is panic in the market as to what will happen to the orders already booked and the shipments. Will we need to offer discount? No clarity on how to move ahead,” he said, adding a scheduled business trip to the US along with his son later this week now stands cancelled.

    The Rs 2,000 crore Farida group, which has planned an aggressive expansion over the next two years, has 20,000-plus employees across five of its major factories.

    The US market, as per Ahmed, is a growing one, where Farida and at least five other major players from TN have a major stake.

    “In the last five years, it is the only market to continue growing. From our country standpoint, US accounts for the bulk of leather exports with south alone contributing 60 per cent share,” he said.

    As per IBEF, during FY25 (April-Dec), the total export of leather products to the US was valued at Rs 6,870 crore ($795.55 million), an increase of 16.30 per cent YoY. During the same period, Germany and the UK imported leather and leather products worth Rs 3,567 cr ($413.08 mn) and Rs 2,888 cr ($334.44 mn) from India, respectively.Gems and jewellery industry’s K Srinivasan, CMD, Emerald group, operating out of Coimbatore, also equally shocked with the tariffs imposed on India by the US.

    “We were expecting it to be similar like the old tariff (5-13.5 pc) but the new rate (30-38.5 pc) will have a huge impact. We can’t compete,” he said, anticipating migration of businesses to other places. Nearly 80 per cent of the gems and jewellery industry will bear the brunt.But for the group, the tariffs may not have a tremendous impact as the exposure to the US market is negligible.

    “Our exports are only 10 per cent of which around 2 per cent caters to the US.”

    Emerald Jewelry India Limited, incorporated in 1984, has the largest factory in Asia – an installed capacity of 40 tonnes in gold, 22,000 carats in diamonds, 2,200 kg in platinum and 144 tonnes in silver per annum.

    It has multiple factories, including a two-year-old unit in Chennai, where it employs 500 people and manufactures automated chains.

    Uday Kumar Vummidi, president, Chennai Jewellers Association also said the latest tariff news has put spokes on all systems.

    Since gold has become a commodity from the times when the yellow metal had cultural significance, he sees a big shift in the buying trends with the younger generation discerning preferences.

    However, Vummidi is confident India, which is one of the largest buyers’ market, would not accept the tariffs change lying down.

    “In fact, due to the GST, already the base cost has become exorbitant in the last three years. Additional tax (without any value add) is only going to hurt the business,” he lamented.

    Hemamalini Venkatraman
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