Orders on hold, exporters brace for uncertain times

NEW DELHI: With barely 48 hours to go for US tariffs to kick in and no deal with India so far, exporters are keeping close tabs on duty announcements, not just for India but others as well, as orders are on hold due to uncertainty around US President Donald Trump's next move.

"It's an unpredictable situation. If there is some announcement that benefits India, orders will start flowing. Shelves are empty (in American stores) and the inventory that was built up is almost over. Orders have been placed with us, but buyers have said we should go into production only after uncertainty lifts," said Sudhir Sekhri, chairman of Apparel Export Promotion Council.

Gem & Jewellery Export Promotion Council chairman Kirit Bhansali is hopeful of India managing a good deal but acknowledges that the tariff uncertainty has impacted orders. "Some consignments are going at 10% duty but buyers are waiting as they still have some stocks after the rush to ship goods in April," he said. Bhansali argues that American retailers, who enjoy 60-70% margin compared to 4-5% for Indian suppliers of loose diamonds, will also be impacted by high tariffs.

Govt officials have argued that there is scope for American sellers of jewellery and pharma to absorb the tariff impact.

"The marginal growth of just 0.1% in exports to the US, $663.1 million in April-June 2025 versus $662.5 million in the same period in 2024, suggests stagnation, likely due to tariff announcement by US govt resulting in uncertainty. There has been sharp decline in US bound shipments of agrochemicals & dye intermediates, pointing to possible order deferrals or cautious buying... Such trends suggest that buyers may be re-evaluating inventory needs or renegotiating contracts especially in price-sensitive categories," said Satish Wagh, chairman of Chemexcil.

Although the prospects of an early trade deal remain dim, with USTR Jamieson Greer saying that further talks are required, officials are not ruling out the possibility of a last-minute breakthrough, even as the next round of talks are scheduled to begin on Aug 25.

"The delay in the India-US BTA is unlikely to dampen long-term trade prospects. Both exporters and importers understand that the agreement is a matter of when, not if - and are willing to absorb short-term costs in anticipation of stronger, more predictable gains once the deal is in place," said Ajai Sahay, director general, Fieo.

For garment exporters, it's been a double whammy as China has increased its exports to Europe to offset the impact of higher tariffs in the US, resulting in Indian exporters being edged out. While some orders from American buyers have come to Indian exports, it has not made up for the loss in Europe, said Sekhri. "It is lean season for us (May-Aug) and we usually operate at 70% capacity. Now we are operating at about 70% of that 70%, which means around 50% capacity," he said.

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