India plans relief package for exporters hit by Trump’s tariffs
The levies are the highest in Asia, making Indian goods uncompetitive compared with manufacturing rivals such as Vietnam and Bangladesh
[NEW DELHI] India’s Cabinet will consider proposals for a broad support package for exporters hit by the US tariffs, sources familiar with the matter said, as the South Asian nation braces for an uncertain future with its largest export destination.
The Ministry of Commerce and Industry has proposed measures to ease liquidity for exporters through collateral-free loans and subsidised interest rates, according to the sources, who asked not to be identified as the information is not public. The Cabinet may take up the plan at its meeting on Wednesday (Sep 10) or in the coming days, the sources said.
The relief measures are expected to be funded with the 22.5 billion rupees (S$328 million) the government had set aside for export promotion in the federal budget in February, aimed at cushioning the impact of Trump’s tariff threats, they said.
At the time, India-US ties were still warm, and New Delhi expected to escape relatively unscathed. But relations have deteriorated sharply in recent months, with the White House imposing 50 per cent tariffs in August to punish India for its trade barriers and oil purchases from Russia.
The tariffs are the highest in Asia, making Indian goods uncompetitive compared with manufacturing rivals such as Vietnam and Bangladesh. The US is India’s biggest export market, and the levies are expected to hurt labour-intensive businesses such as textiles and jewellery the most.
Still, signs of a possible thaw have emerged, with leaders from both nations pledging in recent hours to resume trade talks.
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There have been discussions to increase the amount allocated in the federal budget, but talks are still at an early stage, the sources said. The government aims to spend around 250 billion rupees over the next six years to support exporters, the Press Trust of India reported last month, citing an unnamed official.
India’s Ministry of Commerce and Industry did not respond to a request for comment.
According to Pankaj Chadha, chairman of the Engineering Export Promotion Council of India, exporters are facing a loss of about 30 per cent in US-bound shipments because of the higher tariffs, and they want the government to shoulder at least half of the burden. Exporters will also lobby the central bank to allow them to temporarily convert proceeds from their US business at a rupee rate that’s 15 per cent lower than current levels, Bloomberg reported earlier.
With the US market turning uncompetitive, the ministry is also mulling support for exporters diversifying into Africa and Latin America by providing help with branding, packaging, warehousing and export compliance, the sources said. BLOOMBERG
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