Stalin Seeks Centre’s Urgent Intervention To Shield Tamil Nadu Textiles From US Tariff Shock

Chennai, Aug 18 (KNN) Tamil Nadu Chief Minister MK Stalin has urged the Union government to implement immediate policy interventions to protect the state's textile industry from potential devastation due to rising US tariffs. 

The sector, which employs approximately 7.5 million people and represents one of India's largest textile export contributors, faces an unprecedented threat as tariffs could increase from 25 percent to 50 percent.

In a formal letter addressed to Prime Minister Narendra Modi, Stalin outlined comprehensive policy recommendations specifically targeting the textile sector, which serves as the state's primary export revenue generator. 

The chief minister warned that without swift federal action, up to 3 million jobs within the textile industry could be eliminated, creating significant economic disruption across the state.

Stalin's policy framework centers on addressing long-standing structural issues within the textile manufacturing ecosystem. Primary among his recommendations is the restructuring of the Goods and Services Tax inverted duty structure for the man-made fiber value chain, proposing a uniform 5 percent GST rate across the entire production chain. 

Additionally, he has called for the complete elimination of import duties on all cotton varieties to reduce input costs for manufacturers.

The financial support measures outlined in Stalin's proposal include expanding the Emergency Credit Line Guarantee Scheme to provide 30 percent collateral-free loans, accompanied by a 5 percent interest subsidy and a two-year principal repayment moratorium. 

He further recommended increasing the Remission of Duties and Taxes on Export Products scheme to 5 percent and extending comprehensive pre- and post-shipment credit coverage to encompass all textile exports, including yarn products.

The urgency of these measures becomes apparent when examining Tamil Nadu's export dependency on the United States market. 

While 20 percent of India's total goods exports valued at USD 433.6 billion were directed to the US in the previous financial year, Tamil Nadu demonstrated a significantly higher reliance, with 31 percent of its USD 52.1 billion in goods exports destined for American markets. 

This disproportionate dependence amplifies the potential impact of any tariff adjustments on the state's economy compared to other Indian states.

Beyond textiles, Stalin identified several additional sectors vulnerable to tariff impacts, including apparel manufacturing, leather goods, automotive components, machinery, gems and jewelry, marine products, and chemical industries. 

The chief minister emphasised that these sectors share common characteristics as labor-intensive industries, making them particularly susceptible to rapid employment losses in the event of export slowdowns.

According to Stalin's assessment, the textile industry requires immediate attention due to its substantial scale, employment concentration, and significant contribution to export revenues. 

Industry associations consulted during the state government's review process have endorsed these recommendations, highlighting persistent challenges including the current GST duty structure and elevated credit costs that have systematically undermined global competitiveness.

Stalin characterised the current tariff threat as an opportunity to address overdue structural reforms within the textile sector. 

He stressed that resolving these fundamental bottlenecks is essential not only for managing the immediate disruption but also for maintaining Tamil Nadu's position as India's dominant textile manufacturing hub in the long term.

(KNN Bureau)