Export orders on hold, US buyers seek 15-20% discount

MUMBAI/NEW DELHI: Calculators are out. US buyers are seeking 15-20% discount for several products for which orders had been placed before Trump upset calculations by exploding the tariff bomb. While large retailers, with long-term contracts with vendors to cater to global operations haven't altered their sourcing plans, Indian exporters are waking up to orders being put on hold.

There is pressure from US buyers to absorb or share the additional cost they will have to incur for the current orders and those in shipment. There is confusion among buyers and exporters on the ground, said Rahul Mehta, chief mentor at Clothing Manufacturers Association of India (CMAI).


The real worry is demand destruction, especially in sectors like textiles or gems and jewellery where discretionary purchase is involved as Americans postpone purchases. Industry fears a slowdown in fresh orders. Higher tariffs may also pose liquidity pressure on US buyers, especially the smaller ones, as they will have to suddenly shell out higher customs duty, said an exporter.

Global fashion brands are rethinking their strategies. For now, they are recalibrating costs - several US buyers have asked Indian suppliers for price adjustments or discounts to offset the tariff hike.

'India very much on global retailers' sourcing map'

We are also hearing that some buyers and Indian exporters have struck deals to split the additional tariff burden," said Kashika Malhotra, head of business development at Brandman Retail, which is a distributor for US brands like Jansport and Timberland in India.

"Some of our buyers are in a huddle and will begin negotiations next week. But indications are that they will suggest a three-way split between the seller, buyer and consumer. In our business, margins are so low that it's tough to offer any discount," said a leading garment exporter. On the ground, factories are juggling schedules - some shipments to the US are delayed, and one can expect companies to hold off on big procurement or expansion decisions until there's more certainty. "Overall, global retailers are concerned and making tactical adjustments, but India remains very much on their sourcing map. The consensus is to work with Indian partners on solutions," Malhotra said.

"Although we have not seen significant shifts yet, the recalibration has begun... India, though impacted, still has an inherent edge, especially when peers like Vietnam and Bangladesh face steeper duties," said Shiraz Askari, president at Apollo Fashion International.