India’s Badhi: Surya Mani Tiwari has been a sleepless night since President Donald Trump slapped India with 50% tariffs.
The 78-year-old export carpet is worth more than 1 billion rupees ($11.4 million) from Badoi in Uttar Pradesh, northern India, to the US every year. But the highest level of tariffs to date has stopped business and brought business.
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“We are completely dependent on the US for our business, and there are no other markets. The tariffs have stopped our production and no commission has been sent to the US for the past month,” Tiwari told Al Jazeera. “This is the worst stage in my 50-year career in the carpet business and if things don’t improve in the next two months, the industry will die in a painful way.”
Tiwari is one of Badoi’s hundreds of carpet exporters commonly known as Indian carpet city since Trump announced tariffs in India, and has been staring at the complete collapse of the business since it announced 25% on August 7th.
India’s mostly export-based carpet industry produces a wide variety of carpets, including wall-to-wall carpets in high demand in the US, including wall-to-wall carpets in homes and businesses.
The industry, with sales of Rs 160 billion ($1.83 billion), employs more than 2.5 million people nationwide, according to the Carpet Export Promotion Council (CEPC).
Bhadohi is the epicenter of the carpet business, managing more than 80% of total sales. It houses approximately 1,200 exporters, making it twice as much a manufacturer. Approximately 1.4 million people, 5-6%, are women, and they rely on this business.
“We have been ruined by high tariffs like the carpet industry is operating completely in exports with a very negligible domestic presence,” CEPC director Piyush Baranwal told Al Jazeera. “The US is a major market for our business, contributing to a share of about 60% of total sales. Millions of people make a living through the carpet. This is like the cottage industry here.”
Although production had already declined since Trump announced mutual tariffs on April 2, manufacturers and exporters still hoped that the bilateral debate between New Delhi and Washington would bring about a competitive tax rate.
“We were hoping that the discussion would help us sort out the issues, but nothing fruitful came out, which was very disappointing. The strict tariffs effectively put the industry on ventilators because they can’t pay such high taxes if the wholesaler’s margin is less than 8-10%,” Balanwar said.
Market share slippage
Carpet exporter and international partner Sanjay Gupta noted that the industry will generate jobs on a large scale despite its modest turnover. It functions like a cottage industry where exporters outsource orders to weavers who work from home.
“Weavers are the main force here,” he said. “A sudden tariffs have a huge impact as it can cause large unemployed people to move to other states and it will be difficult to bring them back in the future.
Exporters also fear that Indian competitors in the carpet business, such as Turkier and Pakistan, which have low tariff rates at 15% and 19%, respectively, will take the market in the US.
“It will become increasingly difficult to hold market share in the US as other countries with lower tariffs will undoubtedly try to increase control. Without a timely resolution, we could lose a large portion of the US market.”
The losses in the business also spread to intermediaries such as MD Zamir Ahmed (age 40), who supplies cotton yarn to manufacturers. “We’ve been struggling for the past five years since yarn suppliers began to deal directly with manufacturers and devour our profits. The small markets we still owned ended with these tariffs.”
unemployment
Layoffs have begun in the carpet industry as orders have declined since the announcement of tariffs. Weavers, who are paid daily based on their jobs, are mostly unemployed and are beginning to move to other states.
Raza Khan, president of the All India Carpet Manufacturers Association (AICMA), told Al Jazeera that around 100,000 people could be unemployed, with the number being 700,000, or half the weave population of Bhadohi.
Fatima Samir, the mother of 30 daughters, is working on binding carpet, a process that finishes the raw edges of the carpet. Even that small amount has now been cut, forcing her youngest daughter to be kept out of school due to a financial crunch. Her husband, Carpet Weaver, moved to another city in April. So he found a job at a soft drink bottling factory when orders at Badhi began to slow down.
Despite his money being sent home, the extra costs of running through the two houses are struck by the family, causing Samir to worry about his daughter’s future.
“I’m trying to give my daughter a good education and I don’t want them to be involved in this silly job, but the declining work worries me, she said.
Carpet maker and exporter Imtias Ansari, 50, told Al Jazeera that employees have already reduced business days.
“We have reduced our employees’ working hours to just three days a week due to the current crisis, and if the situation remains the same, we may need to start suppressing them.
Obaidulla Asri, 45, a local journalist who has written about the Bhadohi Carpet industry for several years, warned that things could get worse.
Manufacturers borrow money from the bank to make carpets that are ordered, but are only paid for 2-3 months after delivery.
“The manufacturers here are working on bank loans and have long-standing credits with US buyers. Order hunger has a fatal impact not only on the industry and its workforce, but also on the entire city’s economy.
