Amul, ITC & Parle may shift US exports to Mexico/Dubai after Trump’s 50% India tariff. Amul plans local US dairy production, while ITC eyes Dubai biscuit hub.
Amul, ITC, Parle Weigh Mexico/Dubai Bases to Bypass $1B+ Trade Barrier
Indian Brands Rethink US Strategy as Tariffs Bite
Mumbai/New Delhi – Major Indian FMCG firms including Amul, ITC, Parle and Godrej are scrambling to establish alternative production bases for US exports after President Trump’s 50% tariff hike on Indian goods. With key products like dairy and biscuits facing 60-70% total duties, companies are evaluating:
✅ Local US manufacturing (Amul’s dairy expansion)
✅ Third-country hubs (ITC’s Dubai packaging, Blue Star’s Mexico plans)
✅ Diaspora-focused premium pricing (limited viability)
Company-Specific Contingency Plans
1. Amul: Betting on Local US Production
- Already sells US-made milk (cost advantage vs imports)
- New plans: Cheese, paneer, butter manufacturing in USA
- Avoids: 60-70% dairy tariffs + new 50% surcharge
Jayen Mehta, MD:
*”Price-sensitive categories like dairy become unviable with 110% cumulative duties. Local production protects margins.”*
2. ITC: Dubai Biscuit & Frozen Food Hub
- Current: Packages atta in Dubai (bypasses India’s wheat export ban)
- Future: May shift biscuits, ready-to-eat meals, shrimp exports
- Challenge: UAE faces 10% US tariff (better than India’s 50%)
3. Blue Star: Mexico AC Factory
- 25% US tariff on Mexico vs 50% on India
- Maquiladora model: Assemble in Mexico, export duty-free under USMCA
Tariff Math: Why Relocation Makes Sense
| Product | Current India→US Duty | Alternative Route |
|---|---|---|
| Amul Cheese | 60% + 50% = 110% | Make in USA (0%) |
| ITC Biscuits | 20% + 50% = 70% | Dubai→US (10%) |
| Blue Star ACs | 25% + 50% = 75% | Mexico→US (25%) |
Industry-Wide Impact
💰 $1B+ Export Revenue at Risk (FMCG + appliances)
🛒 Price Hikes Inevitable – Indian snacks may cost 2X in US stores
📉 Diaspora Demand Squeeze – 70% of buyers are price-sensitive NRIs
Geopolitical Context
🇺🇸 Trump’s ‘America First’ 2.0:
- Targets $3.3B Indian FMCG exports
- Aims to reshore food processing jobs
🇮🇳 India’s Counter-Options:
- PLI subsidies for export-oriented manufacturing
- Fast-track EU FTA to diversify markets
Investor Takeaways
💡 Watch: Amul’s Wisconsin/Michigan dairy plant talks
💡 Opportunity: Indian brands joint-venturing with Mexican manufacturers
💡 Risk: Dubai’s 10% duty may still hurt vs Vietnam’s 0% (no FTA)
The Bigger Picture
🔮 2025 Scenarios:
- Best Case: Biden reverses tariffs post-election
- Likely Case: Indian firms absorb 20% cost hikes temporarily
- Worst Case: Permanent 50% duty forces full supply chain exits
Final Thoughts
This tariff war could accelerate Indian FMCG’s globalization—forcing firms like Amul and ITC to compete as true MNCs rather than export-dependent players. Mexico and Dubai may emerge as unexpected winners in this trade chess game.