The US has implemented new tariffs of 50% on textiles, gemstones and marine products. This is causing significant problems for Indian exporters.
According to Dr. Srividya Jandhyala of ESSEC Business School, the author of ‘The Big Disruption’: How geopolitics are changing companies, managers, and work, this substantial rise has placed them in a “significant comparative disadvantage” compared with competitors from other countries.
Srividya is a specialist in international strategy, global business and geopolitics.
She teaches students at ESSEC in the undergraduate, masters and executive programs on geopolitics, strategy and international business.
Jandhyala, ICD on Wednesday said that the apprehension about these tariff increases has had an immediate effect.
Competitivity Challenge
Many exporters who are characterised as having “relatively low margins” may find it impossible to compete at the current tariff rates.
Jandhyala says that the main issue facing Indian exporters, is not the headline tariff of 50%, but the fact “that it is higher than the rates faced by competitors in other countries such as China, Vietnam or Ecuador.”
The competitive landscape is fundamentally altered by this disparity.
Jandhyala explained that the success of Indian firms in the US is less dependent on the quality, value, and innovativeness of the products, but rather on the country from which they are sourced.
She notes that while Indian exporters can invest “in products, improve the quality or try to be more efficient,” it is “much harder to change your origin.”
She also emphasized that the relative success of Vietnamese exporters would be based on their nationality and not their product’s quality.
It is clear that geopolitical issues are influencing market success and access more than ever before, often overriding the product’s attributes.
Market shifts and unanticipated benefits
According to Jandhyala, the new trade barriers will force Indian exporters to seek more lucrative markets in Europe and Asia.
You can also look to the domestic market.
The reduced viability on the US market is the direct cause of this strategic shift towards diversification.
She said that this shift might have an “unexpected” side effect: Domestic consumers could gain access to products of superior quality previously reserved for export almost exclusively.
Exporters must now find a way to compensate for the lost US orders.
Jandhyala is added to the list
De-risking export dependences could prove beneficial if it is successful.
Global trade is uncertain
The long-term path of the global economy is still a mystery. India is a powerful example of the volatility.
Jandhyala said that “a few months back, Indian nationality was an advantage for Indian firms over Chinese companies.”
She pointed out that “today the tables appear to have been turned.”
Businesses around the world are faced with critical questions in light of this rapid turnaround.
Companies considering investments in the future face a major dilemma due to the current economic climate.
Jandhyala is added to the list
What are the best ways for companies to continue making long-term investments in their supply chains, marketing departments, innovation centers or manufacturing teams when there is uncertainty about what lies ahead?
The pervasiveness of uncertainty in geopolitical changes and trade policy creates an environment that is difficult for businesses to plan for long-term success. They must be able to adapt and have foresight as they navigate a global economy becoming increasingly complex.
The post Trump Tariffs Put Indian Gems and Textile Exporters at a’significant Disadvantage’ Says ESSEC Prof. Srividya Jandhyala first appeared on COINPAPER.COM
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