By Dhwani Pandya and Praveen Paramasivam
MUMBAI/CHENNAI (Reuters) -Ever since Donald Trump‘s tariff salvo on India this week, garment maker Pearl Global – whose U.S. client list includes Gap and Kohl’s – has been receiving midnight panic calls with an ultimatum: share the tariff hit or move production out of India.
To calm U.S. customers’ nerves, Pearl Global has offered to shift production to its 17 factories in Bangladesh, Indonesia, Vietnam and Guatemala to bypass the steep U.S. levies on Indian imports.
“All the customers are already calling me. They want us to … shift from India to the other countries,” Managing Director Pallab Banerjee told Reuters in an interview.
Trump’s initial tariff proposals in April – which were lower for India than for the rival Asian garment hubs of Bangladesh, Vietnam and China – had been seen as an opportunity for India to rapidly expand in the $16 billion apparel exports market.
But the tables have turned as relations between New Delhi and Washington have soured, with India now facing a 50% tariff, versus 20% for Bangladesh and Vietnam, and 30% for China.
Pearl gets roughly half of its business from the United States. Some clients offered to continue taking products from India if it could share the tariff burden, but that is not viable, Banerjee said, without naming the customers.
‘IN THE DOLDRUMS’
The 50% U.S. tariff – comprising 25% that kicked in on Thursday and another 25% due to come into force on August 28 as a penalty for buying Russian oil – has stunned U.S. garment buyers and their Indian suppliers, who say they are considering taking their manufacturing operations beyond Indian shores, even to less-established garment hubs like Ethiopia and Nepal.
Some exporters also say they have been asked by U.S. clients to put orders on hold.
New Delhi has called Trump tariffs “extremely unfortunate”.
India’s garment sector was already grappling with a labour crunch and limited production capacity. But the prospect of exporters shifting production outside India would also be a blow to Prime Minister Narendra Modi’s “Make in India” policy drive.
While Pearl can use its foreign factories to meet U.S. orders, exporters that rely on domestic factories are set to be hit much harder.
RichaCo Exports has shipped $111 million of garments to the U.S. this year, with clients such as J. Crew Group, customs data shows. All were made in its more than two dozen factories across India. Around 95% of its annual Indian revenues come from the United States, said general manager Dinesh Raheja.
