Indian exporters are looking to expand production in Africa to continue supplying their US customers after US tariffs of 50% on Indian exports went into effect on Wednesday 27 August.
Indian garment suppliers such as Gokaldas Exports and Raymond Lifestyle, which sell to US clothing companies such as GAP, are looking to capitalise on tariffs as low as 10% in some African countries, Bloomberg reports.
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“We will continue to expand in Africa in case of 50% tariffs,” Gokaldas Exports’ managing director, Sivaramakrishnan Ganapathi, told Bloomberg, although he hopes US-India tensions will settle down soon.
US tariffs on India grew to 50% after US President Donald Trump imposed a 25% penalty for the country’s purchases of Russian oil and weapons. In 2023, India exported more than $20bn (Rs1.76trn) of textiles, jewellery and diamonds to the US. According to Bloomberg, the volume of trade is expected to drop dramatically, in some cases by up to 90%.
Gokaldas Exports has four factories in Kenya and one in Ethiopia. Raymond Lifestyle also has a plant in Ethiopia, where it expects to shifts some of its production. Dharmanandan Diamonds, a diamond manufacturer based in Mumbai, is also weighing increasing its production in Botswana due to the tariffs, Reuters reported.
A shift to manufacturing in Africa for Indian exporters would not happen overnight. Exporters have also underlined that any shift is contingent on the tariffs staying high, which is a possibility given the whirlwind nature with which they have been imposed and retracted since April.
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By GlobalDataThe willingness of manufacturers to consider expanding operations in Africa highlights the significant impact of current US tariffs on India. This situation also emphasises a growing business opportunity for countries that have established manufacturing infrastructures but are subject to lower tariffs. As these continue to put pressure on global supply chains, a country’s level of access to the US market is becoming an increasingly important consideration for foreign investors.
