India-US trade deal: Elated exporters eyeing discount cuts on orders

A large garment exporter, who was at a party on Monday when Trump announced the removal of 50% tariffs, celebrated the news before getting on to calls with American buyers. Suddenly, the business dynamics looked different.

From looking to relocate a part of ops to Sri Lanka, Kenya or Indonesia on the suggestion of US buyers, by morning, the exporter asked his office to pull out the list of all goods in transit. With tariffs set to be cut to 18%, the $1.50 discount being offered on garments won’t apply to shipments reaching US ports post-deal. “There’ll either be a fresh invoice, or an upcharge. We were taking a hit of around Rs 50 crore by selling at a discount,” said the exporter.

Gems & jewellery, leather exporters await fineprint
Most exporters spent early Tuesday with buyers discussing the way forward, especially with garment orders for the next season being finalised.

“We are in talks with our buyers and they are very happy. The timing of the announcement has been very good as orders for the next season were being finalised. The future is looking very bright, and we need to build scale, focus on expansion and skilling to take advantage of it,” said Sudhir Sekhri of Trendsetters, an exporter of womenswear.

But the leather goods suppliers have missed the bus for the next season. “We will have to wait now. We had given up hope on the deal, but things are looking up now. American business is American business. No one can match it. The orders are large, it has its own charm,” said Farida Group chairman M Rafeeque Ahmed, whose company is a supplier to leading global brands. But all is not lost for him since he has shifted some of the orders to his factory in other countries, which is smaller.

“The tariff cut lowers costs for US importers, provides immense relief to diamond jewellery manufacturers enhancing the competitiveness of Indian diamond jewellery in the largest export market. This is poised to revive demand and stabilise operations,” said GJEPC chairman Kirit Bhansali, while pitching for zero-duty access for Indian diamonds.

Gems & jewellery exporters are waiting for the fineprint of the deal to emerge. “The sentiment is positive because we will be more competitive than some of the competing countries. Our buyers have inventory and we will be back in business once the details are out,” said Kama Jewelry MD Colin Shah.

“We have waited for six months, the impact will last for another month or two at best,” said Ramesh Kumar Juneja, who leads the Council for Leather Exporters.