Exporters seek assistance, credit at affordable rates to deal with Trump tariff

Economic Times

2 days ago

Indian exporters from various sectors, including food, marine, and textiles, have sought financial assistance and affordable credit from the government to cope with the 25 per cent Trump tariff, industry officials said.
In a meeting with Commerce and Industry Minister Piyush Goyal in Mumbai, certain exporters sought plans on the lines of the production-linked incentive (PLI) scheme, they added.
"Exporters share issues, which they may face in the American market because of the high duty announced by US President Donald Trump," one of the officials said, adding that the minister has suggested that the exporting community send their suggestions in writing.They also demanded loans at affordable rates and fiscal incentives.In India, according to exporters, interest rates range between 8 and 12 per cent or even more, depending on the spread and risk assessment of the borrower by authorised dealer banks. In competing countries, the interest rate is very low. For instance, the central bank rate is 3.1 per cent in China, 3 per cent in Malaysia, 2 per cent in Thailand, and 4.5 per cent in Vietnam.
The situation for sectors like apparel and shrimp is not good. US buyers have started cancelling orders or are holding back orders. In the coming months, it can impact India's exports to the US, and because of a dip in shipments, there could be job losses," they said, adding that it will be difficult for the government to extend fiscal incentives.The 25 per cent duty, announced this week, will come into force from August 7 (9.30 am IST). These will be over and above the existing standard import duty in the US.The sectors, which would bear the brunt of this high tax, include textiles/ clothing (10.3 billion), gems and jewellery (12 billion), shrimp (USD 2.24 billion), leather and footwear (USD 1.18 billion), chemicals (2.34 billion), and electrical and mechanical machinery (about USD 9 billion).The US accounts for over 30 per cent of India's leather and apparel exports.According to think tank GTRI, quick estimates suggest that India's goods exports in FY 2026 may come down by 30 per cent from USD 86.5 billion in the last fiscal to USD 60.6 billion in 2025-26.Sudhir Sekhri, Chairman, AEPC (Apparel Export Promotion Council), last week requested immediate government intervention to offset this huge setback."Exporters have their back against the wall and will have to sell below cost to keep their factories running and avoid mass layoffs," he has said.Plastic exporter from Delhi NCR region Arvind Goenka said that exports to the US will face stiff competition from competing countries as tariffs on India are one of the highest."The USA has fixed substantially lower tariffs on countries like Vietnam (20 per cent), Thailand (19 per cent) and South Korea (15 per cent), all of which excel in plastic goods production, and they may encroach into India's share, which currently is USD 2.2 billion annually," Goenka said.
India's leading footwear exporter and Farida Group Chairman Rafeeq Ahmed said the government should come forward to help the industry before a trade pact is finalised between India and the US.