NEW DELHI: Staring at a steep dent, exporters have asked govt to restore several benefits that have been stopped, such as the interest equalisation scheme and Remission of Duties and Taxes on Exported Products (RODTEP) for SEZ and export oriented units, while prioritising sectors that will be more adversely hit by Trump’s tariffs during the first tranche of the trade agreement with the US.
While life is looking challenging for all sectors, given the steep 26% levy imposed on all Indian exports to the US, marine products, dairy, medical equipment, machinery and carpets are among sectors that are seen to be the hardest hit. Given that these are also labour intensive sectors, govt may be inclined to push them more aggressively.
Sources, however, indicated that there is no clarity on how the Trump administration will lower tariffs even if govt were to offer immediate concessions, which would be permanent in nature.
A day after the tariff hike was announced, govt departments actually got down to gauge the impact. Several exporters, who were drawing from India’s tariffs being lower than some of its rivals were also more measured in their response, having assessed the possible extent of damage.
A section of businesses has petitioned that govt should seek a deferment of reciprocal tariffs with the US authorities, given that India is already negotiating a bilateral trade deal. Officials, however, see little chance of Trump agreeing to accept the demand.
Sources in govt, however, appeared more amenable to accepting some of the demands of exporters, particularly enabling them to beat some of the handicap by allowing for interest subsidy, especially for labour intensive sectors, such as textiles, leather and handicrafts.
The scheme was discontinued in Jan and despite repeated suggestions from the commerce department, the finance ministry has refused to restart it. Similarly, RODTEP stopped in Feb for a section of exporters while the entire scheme is due to end in Sept with no guarantee of extension. “It will provide much-needed certainty,” said an industry executive.
The commerce department is working on some other steps, which are expected to be expedited now.
Some exporters have suggested that govt provide some assistance in helping them diversify their markets at a time when every country is seeking to reduce their exposure to the US and derisk their exports. Besides, the proposal is meant to ensure some of the edge that will accrue to countries like Turkiye in, say, textiles can be blunted with the support.
