By T N Ashok
India’s export-led growth strategy is facing its most severe test in years as sweeping U.S. tariffs imposed by President Donald Trump ripple through the country’s manufacturing heartland, triggering order cancellations, factory slowdowns and mounting job losses. Nowhere is the pain more visible than in Tamil Nadu, one of India’s richest and most industrialized states, whose chief minister has warned Prime Minister Narendra Modi of “irreparable damage” to the regional economy unless Washington and New Delhi strike a trade deal soon.
In a letter sent this week, Tamil Nadu Chief Minister M.K. Stalin said the state is suffering daily revenue losses of nearly ₹600 million ($6.7 million) as export orders dry up across key industrial districts. Tiruppur—often described as India’s knitwear capital—has seen confirmed export orders worth ₹150 billion wiped out since August, he said, forcing manufacturers to slash production by as much as 30%.
The disruption follows Trump’s decision to impose tariffs of up to 50% on a wide range of Indian goods, among the steepest levies faced by any major U.S. trading partner. The tariffs, announced in August as part of Trump’s broader push to rebalance U.S. trade and protect domestic manufacturing, have hit India’s labour-intensive export sectors particularly hard, including textiles, leather goods, gems and jewellery, footwear and processed foods.
For India, the stakes are high. The U.S. is its single largest export destination, accounting for roughly one-fifth of total outbound shipments. The tariffs have not only made Indian goods sharply less competitive in American markets but have also undermined Prime Minister Modi’s flagship “Make in India” initiative, which seeks to turn the country into a global manufacturing alternative to China.
Despite months of negotiations and repeated assurances from Indian officials that a bilateral trade agreement is imminent, talks have stalled. The tariffs remain in place, leaving exporters uncertain whether to wait, relocate production, or abandon the U.S. market altogether.
Tamil Nadu has borne some of the worst fallout. The southern state contributes nearly 28% of India’s textile exports and employs an estimated 7.5 million workers across spinning, knitting, dyeing and garment-making units. Its leather and footwear industry accounts for about 40% of national exports in that sector, supporting more than one million jobs. The state is also a major hub for automobile manufacturing, electronics assembly and precision engineering.
“These are not speculative losses,” Mr. Stalin wrote. “They are confirmed orders already withdrawn or suspended.” Small and medium-sized enterprises, which form the backbone of Tamil Nadu’s export ecosystem, are being pushed “to the brink of collapse,” he warned.
Exporters in Tiruppur say U.S. buyers have either cancelled contracts outright or demanded steep price cuts to offset the tariffs—cuts most Indian manufacturers say they cannot afford. Many factories are now operating on reduced shifts, while some subcontractors have shut down entirely.“The margins in garments are thin even in good times,” said a senior textile exporter based in Coimbatore. “A 50% tariff doesn’t just hurt competitiveness—it wipes it out.”
Tamil Nadu is not alone. Andhra Pradesh Chief Minister N. Chandrababu Naidu, a key coalition partner of Mr. Modi, has also flagged sharp declines in shrimp exports to the U.S., threatening the livelihoods of coastal farming communities. Gujarat’s diamond polishing units, Maharashtra’s jewellery exporters and leather clusters in Uttar Pradesh have reported similar distress.
According to industry estimates, India’s merchandise exports to the U.S. have fallen by double digits since the tariffs took effect, translating into billions of dollars in lost earnings. The federal government has rolled out temporary relief measures, including interest subsidies and expanded credit guarantees for exporters, but business leaders say these steps only cushion the blow rather than solve the underlying problem.
Economists warn that prolonged tariffs could also dampen foreign investment, particularly as India competes with Vietnam, Mexico and Indonesia for global manufacturing contracts. While mobile phone exports—dominated by Apple suppliers in Tamil Nadu—remain exempt from Trump’s tariffs for now, other electronics segments are under pressure, and companies are reassessing future expansion plans.
Mr. Stalin, whose Dravida Munnetra Kazhagam party is a prominent opposition force, has often clashed with the Modi government. But analysts say his letter reflects growing bipartisan concern at the state level that trade policy decisions made in Washington are inflicting localized economic damage that New Delhi cannot ignore.“The current trade stalemate is not merely an economic setback,” Mr. Stalin wrote. “It is a looming humanitarian challenge.”
That language underscores the political risks for Mr. Modi, who has built his national appeal on promises of job creation and manufacturing growth. With state elections looming in several regions and national polls on the horizon, prolonged export distress could translate into voter backlash, particularly in industrial belts where employment losses are felt quickly and visibly.
Indian negotiators continue to press for tariff relief, arguing that India’s exports complement rather than threaten U.S. manufacturing. U.S. officials, however, have demanded greater market access for American goods, stronger intellectual property protections and reduced regulatory barriers—issues that have long complicated bilateral trade talks.
Until a deal is reached, exporters remain in limbo. “Every month of delay deepens the damage,” said an executive at a large apparel exporter. “Once buyers shift sourcing to another country, it’s very hard to win them back.”
For now, container traffic at ports like Chennai tells the story: fewer outbound shipments, longer idle times and growing anxiety across factory floors. As global supply chains grow more politically fragmented, India’s export sector is discovering that access to the world’s largest consumer market can no longer be taken for granted.
Whether New Delhi can secure a breakthrough with Washington may determine not only the fate of millions of jobs, but the credibility of India’s ambition to emerge as a manufacturing powerhouse in an increasingly protectionist world. (IPA Service)
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