India-US Tariff War / Trump's tariff will get a befitting reply, exporters made this demand from the government

India-US Tariff War: Indian exporters have sought financial support and affordable credit from the government to mitigate the impact of 25 per cent duty announced by US President Donald Trump in various sectors such as food, marine, and textiles. In a recent meeting with Commerce and Industry Minister Piyush Goyal, exporters suggested implementing schemes like production-based incentives (PLI).

Impact of US tariff

A senior official said that exporters expressed their concerns over the challenges posed by high tariffs in the US market. "Exporters sought credit at affordable rates and fiscal incentives to maintain competitiveness in the US market," he said. Minister Goyal has directed the exporting community to submit their suggestions in writing. This 25 per cent duty, which is in addition to the existing standard import duty, will come into effect from August 7, 2025 (9:30 am IST).

Interest rate differentials

Exporters said interest rates in India range from 8 to 12 per cent or even more, which is much higher than global competitors. For example, the central bank rate in China is 3.1 per cent, Malaysia 3 per cent, Thailand 2 per cent, and Vietnam 4.5 per cent. These high interest rates increase the cost of Indian exporters, thereby affecting their competitiveness.

Sectors affected and employment at risk

The higher duties will particularly impact sectors such as textiles ($10.3 billion), gems and jewellery ($12 billion), shrimp ($2.24 billion), leather and footwear ($1.18 billion), chemicals ($2.34 billion), and electrical and mechanical machinery ($9 billion). The US accounts for over 30 per cent of India's leather and apparel exports. Exporters warned that exports could decline due to cancellation or halt of orders by US buyers, which could also impact employment. Sectors such as apparel and shrimp in particular are already under pressure.

Challenges for the government

Exporters also acknowledged that it may be challenging for the government to provide fiscal stimulus. Nevertheless, they stressed the need for support through schemes such as cheap credit and PLI. Industry experts believe that the government must take immediate steps to maintain the competitiveness of exporters, so that India's position in the global market remains strong.