Commodity Market: US-Vietnam Deal Triggers Disruption in Textile Industry, Sparks Concern in India

US-Vietnam Deal: The recently signed trade agreement between the United States and Vietnam has stirred significant unease within India’s cotton and textile industry. Under this new deal, the U.S. will impose only a 20% tariff on imports from Vietnam, whereas Indian textile exports will continue to face a 26% tariff. This tariff disparity could make it difficult for Indian exporters to compete, potentially leading to a shift in global orders.

This deal comes at a time when the global market is already grappling with falling demand and rising production costs, further challenging Indian textile companies trying to maintain their hold in the U.S. market.

What Do Experts Say?

Nivedan Churiwal, Managing Director of BSL Limited, commented, “The U.S.-Vietnam deal has come at a time when the global landscape has been shifting rapidly over the past 3–4 months. Every day brings a new development, and the full implications may not be known until July 9.”

He further explained that the agreement clearly adds pressure on Indian textile exporters. With Vietnam enjoying a tariff advantage, its goods will become more cost-effective in the U.S. market, whereas Indian products will appear more expensive, prompting international buyers to favor Vietnamese suppliers.

Why Should India Be Worried?

India’s textile industry is already competing with giants like China and Vietnam. Now, with Vietnam receiving a tariff concession from the U.S., its export competitiveness is set to increase dramatically. This could be a major blow to India, especially since the U.S. remains one of its largest export markets.

Churiwal suggested that India must urgently pursue a parallel trade agreement with the U.S. to secure similar tax relief for Indian goods. He also recommended that Indian manufacturers optimize their costing models and supply chains to remain competitive in the new scenario.

Impact on Spot Market and Fiber Prices

Churiwal also warned of potential impacts on raw cotton and fiber prices. India may need to adjust its spot pricing mechanisms to remain globally competitive. This could involve government support or subsidies to help both farmers and manufacturing units absorb the shock.

All Eyes on July 9

The July 9 timeline is critical, as the U.S.-Vietnam trade deal could be formally implemented from that date. Until then, uncertainty looms large over the industry. If the deal goes live as scheduled, Indian exporters will need to act swiftly to adapt their strategies.

In summary, the U.S.-Vietnam trade deal has emerged as a serious challenge for India’s cotton and textile industry. It is imperative that both the Indian government and the private sector act proactively, evaluate the implications of this development, and introduce appropriate policy responses. If timely measures are not taken, India risks losing its market share in the global textile trade.