US President Donald Trump’s administration has imposed a 10% universal tariff on all imports from every country, including India.
Gokaldas Exports Ltd, a listed garments exporter, will focus on expanding its business in Europe because tariffs have hurt business with its main export market – the US.
“Since there is a lot of tariff uncertainty, we are pivoting to Europe. The idea is not to reduce our US business in absolute terms, but for incremental business we will focus on Europe including the UK,” said Sivaramakrishnan Ganapathi, managing director of Gokaldas Exports.
Margins of apparel exporters including Gokaldas have come under pressure following the tariff levy. US retailers have been unable to pass on the increased cost to consumers and are pushing for their suppliers to share the burden, Ganapathi said.
“In the short term, we may also have to bear some of that cost just to keep up the relationships,” he said. Gokaldas got about three-fourths of its ₹3,864 crore FY25 revenue from the US.
The US is the largest export destination for Indian apparel exports. This is because competing apparel-exporting nations Bangladesh, Vietnam, Sri Lanka and Pakistan get preferential tariff rates in Europe, putting Indian exporters at a disadvantage. India’s in-principle trade agreement with the UK last month and progressing talks with the European Union could now level the playing field for Indian exporters.
“Once an FTA with the UK is finalised, it will bring at least a $1 billion apparel export opportunity for India. The opportunity in the EU will be much larger. We should ready ourselves up for this incremental business,” Ganapathi said.
India exported readymade garments worth $16 billion ( ₹1.35 trillion) in FY25, as per data from the Apparel Export Promotion Council, an industry group.
India business
Indian tyre companies are chalking out similar contingency plans. The US is a key export market for Indian tyremakers, constituting about one-fifth of the country’s total overseas tyre sales of $3 billion in FY24.
Balkrishna Industries Ltd, which gets almost three-fourths of its revenue from exports, will focus on expanding business in India with a series of product launches. The company now targets 8% of the global tyre market by 2030 compared with its earlier goal of a 10% share.
“Please note that we are under a slow-moving economy. There are wars happening, there are trade wars happening. Uncertain times are there. So that is why we are looking at it very conservatively,” Rajiv Poddar, managing director at Balkrishna Industries, said on an earnings call on 24 May. “In case anything changes and there’s a catalyst, we are absolutely ready to pounce on that opportunity and go back to our original vision of 10%.”
Ceat, which acquired Canada’s Camso in December, is betting that India will be successful in signing a bilateral trade pact with the US before Sri Lanka and is planning to change its tyre distribution accordingly. Camso gets 30% of its business from the US through its two manufacturing facilities in Sri Lanka.
“In case the tariffs go through, we will produce for the United States from Indian facilities if tariffs are lower here and for Europe from Sri Lanka,” said Arnab Banerjee, managing director and CEO at Ceat.
Apprehensive pharma
Indian pharmaceutical companies are exploring partnerships and investment opportunities to manufacture in the US. While the pharmaceuticals sector has not been slapped with tariffs yet by the US, Indian exporters are apprehensive of surprise levies by Trump.
“We have a very good balance sheet; we have a very healthy financial capacity. We are always looking for opportunities,” Dr. Reddy’s Laboratories chief executive Erez Israeli said last month on investing in the US. “We are not rushing, and we are not obliged for any commitment… But we certainly want to be in the United States long term. We will look for the relevant opportunity for us.”
The contingency plans of pigment manufacturer Sudarshan Chemicals include leveraging its ₹1,180 crore acquisition of Germany’s Heubach Group. Heubach has a plant in the US as well as 19 units in Europe, allowing it the flexibility to tweak its distribution depending on the tariff scenario.
“The new acquisition gives us a lot of flexibility. If there are tariffs on India, we supply from Europe into the US market,” Rajesh Rathi, managing director of Sudarshan Chemicals, told Mint in March.
Jessica Jani in Mumbai contributed to this story.
