Trump tariff war: Tamil Nadu hotels to boycott Pepsi, Coke?

Based in the Southern Indian state, the Tamil Nadu Hotel Association says it comprises over one lakh hotels and restaurants. As per estimates, America’s Coke and Pepsi brands and their offerings dominate the lucrative Indian soft-drink market.

In India, there are 10 sub-brands under the PepsiCo identity, which include Aquafina, 7UP, Mountain Dew, Mirinda, Slice, and Tropicana, among others. Under the Coca-Cola identity, there are nearly a dozen brands, including Sprite, Thums Up, Limca, Fanta, Maaza, Kinley, and Minute Maid. Typically, most of these offerings are stocked in the respective company-provided refrigerators, which are prominently placed in eateries and restaurants.

Industry estimates say that India’s non-alcoholic beverage market(soft drinks and mineral water) was valued at over Rs. 67,000cr ($7.6bn) in 2019, and that it is expected to get to Rs 150,000cr by 2030.

“The idea to boycott American-branded soft drinks and mineral water, in response to Trump’s 50% tariffs against Indian products, has received widespread traction in our business fraternity. In fact, it was accepted unanimously during our discussions with members of the association,” Association President M. Venkadasubbu confirmed to WION.

He added that the consent for the same had been obtained from the hoteliers, and this boycott would come into effect in about two weeks. Queried on how the hoteliers would fill the void left by these popular options, he said that there are plenty of Indian offerings in the soft drinks market. He stated that negotiations are underway to get Indian brands such as Reliance-owned Campa to ramp up supply to all the restaurants that are boycotting US brands. Further, he stated that fresh fruit juices can also be promoted as healthy alternatives to sweetened, carbonated drinks.

Trump tariff war:Impact of Trump’s Tariff war in Tamil Nadu

As one of the major economic engines of India, Tamil Nadu is among the states where the adverse impact of the USA’s 50% tariffs is significant in multiple sectors. Textiles, leather, automobile components, and shrimp are among the exports that are bearing the brunt of Trump’s tariff war.

According to Thirukkumaran, General Secretary, Tiruppur Exporters’ Association, the Tiruppur region in Tamil Nadu exports Rs.. 45,000cr($5.1bn) worth of readymade garments annually. Of this, nearly Rs.. 15,000cr(1.7bn) worth of exports go to the US market. He said that the Trump tariffs have severely affected Tiruppur, where 90% of the functioning units are of the Micro, Small, and Medium Enterprise(MSME) category. He emphasised that

There are 3,000 export units functioning in Tiruppur and about 10,000 support units, which employ a total of almost 10lakh people directly or indirectly.

“Our textile export competitors, Cambodia, Vietnam, Bangladesh, Sri Lanka have been imposed a 20% tariff, so Indian products with 50% tariffs become very expensive. It is not viable for exporters and importers to absorb these additional costs. If this tariff situation continues, there is a chance of brands and clients shifting sourcing to other competing nations. We have requested the Indian Government for relief package, emergency credit, like during the COVID-19 times. We are confident that the Indian government will negotiate a fair deal for Exporters here,” he told WION.

Similarly, Indian leather exports to the US are tariffed at 50%, while competing nations’ leather exports to the US are tariffed at 20%. Ashok of Chennai-based Padmash Leathers & Exports says that there’s a 30% difference in pricing between Indian leather goods and competing nations’ leather goods, owing to the tariffs.

“Most exporters I know are operating at about 5% margins, so there’s no way they can recover from this. Exports to the US are likely to stop on account of this. The only way is to look at alternate markets, the Government is doing a good job at that, maybe the Government could also help with subsidies,” he added.