The spectre of a renewed trade war with the United States under a potential Trump presidency is casting a long shadow over the global textile industry. While the previous administration’s tariffs on China spurred growth for some nations, including India, the anticipated return of protectionist policies threatens to disrupt established trade flows and create new uncertainties.
A recent analysis by the Global Trade Research Initiative (GTRI) reveals that the last round of US-China trade tensions, initiated in 2018, led to a significant decline in Chinese exports to the US. However, this did not translate into a substantial boost for US manufacturing, as anticipated. Instead, trade simply shifted to other countries, with Mexico, Canada, and ASEAN nations emerging as major beneficiaries.
India, too, experienced a surge in exports to the US during this period, driven by sectors like electronics, pharmaceuticals, and engineering goods. However, the GTRI report cautions that a renewed trade war could significantly impact these gains.
Textile Sector Braces for Impact:
The textile industry, a key contributor to India’s exports, is particularly vulnerable to shifts in global trade dynamics. While India has benefited from the decline in Chinese textile exports in certain segments, the resurgence of US protectionism could severely impact its competitiveness.
- Increased Costs: Higher tariffs on raw materials and intermediate goods, such as cotton, synthetic fibres, and dyes, could significantly increase production costs for Indian textile manufacturers.
- Supply Chain Disruptions: A potential trade war could disrupt global supply chains, impacting the availability of critical inputs and creating uncertainty for businesses.
- Market Access Challenges: Increased trade barriers could limit market access for Indian textiles in the US, a major export destination.
Opportunities and Challenges:
Despite the looming threats, the GTRI report also identifies potential opportunities for the Indian textile industry:
- Focus on Value-Added Products: By shifting its focus towards higher-value products such as technical textiles, apparel, and home furnishings, India can enhance its competitiveness in the global market.
- Strengthening Domestic Supply Chains: Reducing reliance on imported inputs and strengthening domestic supply chains for raw materials and intermediates is crucial to mitigate the impact of potential trade disruptions.
- Leveraging Free Trade Agreements: India can leverage existing and potential free trade agreements to gain preferential market access in key export destinations.
The GTRI report emphasises the need for proactive measures to address the challenges posed by a potential trade war. These measures include lowering import duties to enhance competitiveness, further promoting the “Make in India” initiative, and strengthening domestic supply chains.
Conclusion:
The future of the global textile industry hinges on the evolving trade landscape. As the possibility of a renewed US-China trade war looms large, the Indian textile industry must adapt and innovate to navigate these uncertain times. By focusing on value-added products, strengthening domestic capabilities, and leveraging strategic partnerships, India can position itself to capitalise on emerging opportunities and mitigate the risks associated with global trade tensions.
