US Tariff Impact on UP’s Rampur Mentha Oil Sector: Exporters Alerted to Potential Losses and Job Cuts
The mentha oil industry in Rampur is facing a significant crisis as exporters report severe financial losses due to a 50 percent import tariff imposed by the United States on Indian goods. This tariff is jeopardizing the livelihoods of many agricultural workers and laborers in the region. With mentha oil being a vital ingredient in various products, the repercussions of these tariffs are being felt across the supply chain, leading to order cancellations and disruptions.
Impact on Exporters
Export professionals like Amrit Kapoor have voiced their concerns about the drastic changes in pricing due to the new tariffs. Kapoor explained that a product previously priced at USD 20 has surged to USD 30 overnight because of the 50 percent duty. This sudden increase has left buyers confused, resulting in halted orders. Kapoor highlighted that the goods are still being manufactured, but uncertainty looms over when they will be shipped. He also pointed out that over 1 million farmers depend on this industry, and many may not even recover their production costs. The potential decrease in production could lead to job cuts in factories, further threatening the economic stability of the region.
Government Response and Industry Outlook
Shirish Gupta, who leads the Rampur division of the Indian Industries Federation, views the tariffs as a strategic maneuver but remains hopeful about government intervention. He urged the government to develop support schemes for industries affected by these tariffs to prevent closures and protect livelihoods. Gupta expressed optimism that the current situation is temporary and believes that a positive resolution will emerge soon. The industry is looking for solutions to mitigate the impact of these tariffs and sustain its workforce.
Broader Economic Consequences
The ramifications of the tariffs extend beyond Rampur, affecting the export community in Moradabad, known as the ‘Brass City.’ This region generates annual handicraft exports worth between Rs 8,500 and Rs 9,000 crore, with the US accounting for 75 percent of these exports. Haji Iftekhar, an export business operator, reported that the tariffs have brought exports to a standstill, with orders worth over Rs 300 crore already canceled. He warned that this situation could lead to a 50 percent decline in US-bound exports, potentially pushing around 200,000 people into unemployment. Some companies have already begun laying off workers, highlighting the urgent need for a resolution to this trade dispute.
Recent Developments in Tariff Policies
The US administration recently implemented an additional 25 percent tariff on Indian goods, linked to India’s purchases of Russian crude oil, raising the total duties on Indian imports to 50 percent. These tariffs took effect on August 27, impacting products entering the US for consumption. The initial 25 percent tariffs were introduced on August 7, coinciding with similar measures against approximately 70 other countries. The cumulative effect of these tariffs is creating a challenging environment for Indian exporters, who are now grappling with increased costs and diminished market access.
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