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Time of India
4 days ago
- Business
- Time of India
50% tariffs: Here's how India can flip the script on Trump's trade offensive
Live Events As US President Donald Trump hit India on Wednesday with an additional 25% tariff for purchasing Russian oil, raising the total tariff to 50%, Indian businesses and exporters are bracing for the economic repercussions. In response, experts and industry leaders are actively discussing measures to mitigate the impact of these tariff US is a major trading partner of India. In FY25, India exported products valued at $86.51 billion to the US across various categories, including shrimp, textiles, and gems and jewellery. With the India-US Bilateral Trade Agreement at a standstill despite several rounds of negotiations, industry leaders and experts are exploring ways to contain the tariff Indian government is reportedly preparing a Rs 20,000 crore export promotion mission aimed at protecting exporters from global trade uncertainties. This mission is being jointly implemented by the ministries of commerce and industry, micro, small and medium enterprises (MSME), and finance. It is expected to be finalised by August and come into effect by mission, according to sources, will have five components—trade finance, non-trade finance dealing with regulation, standards and market access, better brand recall for Brand India, e-commerce hubs and warehousing, and trade Sahai, DG & CEO of the Federation of Indian Export Organisations (FIEO), explained that when the mission was announced in the Union Budget this year, it aimed to increase access to export credit. From that perspective, there may be some softening of collateral on one hand; there may also be an element of the Interest Equalisation Scheme. 'We have also requested that the Interest Equalisation Scheme for MSME manufacturers be extended to all countries, with a specific emphasis on ensuring that all exporters receive this support for exports to the US, as it will enhance their competitiveness,' he noted that there is a temporary problem, assuming that by September-October this year, India and the US are able to work out the Bilateral Trade Agreement (BTA). However, he pointed out that any losses faced by Indian exporters will be for a limited duration. 'The good thing is that in that scenario, both buyers and sellers want to maintain the equation, and both sides want to look at absorbing the cost. They can look at increasing productivity.'However, 'they have been forced to be innovative' due to Trump tariffs , so there is always a silver lining in all these things as well,' he said. 'Even if the replacement of the US market happens, it will take time. If we are not through with the BTA, we must be prepared for some setbacks in exports. That is undeniable,' he Taneja, Professor, ICRIER, asserted that allocating a dedicated fund to support and shield exporters from the disruptions caused by US tariffs is a commendable and timely initiative. 'This is much in line with what countries like Australia, Spain, and South Korea are doing. The Australian government announced a $1-billion zero‑interest loan package to support businesses facing market disruptions. Spain has combined direct aid and soft loans in its proposed relief package. Similarly, the South Korean EXIM Bank manages the Supply Chain Resilience Fund (SCRF), allowing exporters to respond swiftly to trade wars and geopolitical conflicts,' she a similar view, Shravan Shetty, Managing Director, Primus Partners, said that the fund can prove beneficial, especially for vulnerable segments like textiles, gems & jewellery, and auto ancillaries, wherein production-linked schemes can help provide relief. 'The funds can also be deployed for strategic trade promotion activities and brand-building in alternate markets, such as Africa, the UK, the European Union, and Central Asia,' he Sen, Trade Policy Leader at EY India, emphasised the importance of understanding what percentage of this fund percolates down to the actual exporters who need it. This is important, given the undefined nature of the new Trump tariff regime, he said. 'The arbitrage possible between exports of the same product from different countries; the lack of finality in the rates; the definitional issues, such as what would be considered as 'transhipping', etc., make a structured support scheme difficult to formulate. In case we see a significant downturn in US demand, the amounts from the fund would be needed to explore newer markets,' he also noted the necessity of placing greater emphasis on countries with which we have recently signed FTAs, as they remain underutilised. 'We have one with the UK that will be operationalised; now is the time to start focusing on the UK market and the EU, where an early harvest is expected in the coming months.''So, I think the strategy should be focusing on diversification because with the kind of tariff that has been imposed by the US and the threat issued every day, we cannot rely on the US. Even if BTA happens and an additional tariff in the form of India's relations with Russia is imposed, we can be subjected to any kind of tariff. So, this is the time we should look at diversification in the medium to long term. And we should exploit opportunities with FTAs,' he mentioned that the fund relief and the development of alternative markets will only help in the short to medium term. India must build structural competitiveness and export reliance frameworks in the long term, he said. 'The answer lies in building an export ecosystem that can withstand geopolitical shocks, price wars, and shifting consumer preferences.'He proposed that the government should provide MSMEs and exporters with digital platforms and single windows to facilitate export credit, insurance, and risk cover, while noting that many smaller firms lack awareness or access to EXIM Bank schemes, ECGC support, or interest equalisation benefits. 'Digitising access and simplifying application processes can significantly boost participation,' he other measures, officials have indicated that lowering testing charges for smaller exporters, levied by the Export Inspection Council, can ease exporters' concerns. Additionally, measures like providing customs relief, accelerating GST for exports and increasing RoDTEP can also mitigate tariff impacts, as per industry RoDTEP and RoSCTL schemes, as per Sen of EY India, should be expanded to cover all exports between them. He said that increasing the RoDTEP/RoSCTL rates to directly refund a wider range of embedded taxes and duties not covered by other schemes would reduce overall production costs for exporters, enhance the price competitiveness of their products in the international market and partially alleviate the tariff Kumar Gulati, Chairman at the Compound Livestock Feed Manufacturers Association (CLFMA) of India, said that lowering the charges and simplifying the process for mandatory testing and certification (especially for food, agriculture, pharma, and chemicals) significantly reduces compliance costs. 'It's particularly vital for smaller exporters and for sectors with low margins, directly supporting their ability to remain price-competitive internationally,' he at the sectors, textiles could be one of the worst hit with $4 billion of business, such as t-shirts and home textiles bearing the brunt, especially due to lower tariffs imposed on India's rivals—Bangladesh and Vietnam at 20%. At 50%, US tariffs on India are now the highest lauding government's latest efforts to transform the existing official Export Promotion Mission announced in the Union Budget 2025‑26 with allocation of only Rs 2,250 crore, Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council, recommended to include specific measures for the textile sector in the mission, given the size of the textiles sector which is the second largest employer after agriculture in the country.'The earlier outlay was too modest for the exporting community, and amid tariff woes, we need incentives to offset India's cost disadvantage vis-à-vis competing countries,' he said, adding that 'reviving the Interest Equalization Scheme for five years at an enhanced rate of 5% for all exporters, without any value cap, is crucial.' He emphasized the need for continuity of schemes such as RoSCTL, a moratorium on loan repayments, expedited India-EU trade negotiations, and the quick disbursal of outstanding dues and claims of shrimp exports, totalling nearly $7 billion, to the US could suffer significantly. Even before the new tariffs, Indian seafood exporters were facing stiff price competition and falling prices thanks to increased supply from Ecuador (which faces only a 10-14% tariff).'Shrimp prices dipped by 20-25% in the last year. The oversupply continues to depress global prices, which further erodes profits and export earnings for Indian producers. It's estimated that Indian exporters are already facing losses of Rs 600 crore due to order cancellations and containers stuck in transit as these tariffs take effect. Margins in the industry are a slim 4-5%, making it impossible to absorb such steep tariff hikes, and exporters fear a significant long-term loss of market share, with Ecuador likely to replace India as the top shrimp supplier to the US,' pointed out added that the government's Rs 20,000-crore scheme will focus on making export credit accessible, enhancing brand building, and addressing non-tariff barriers. The aim is to provide liquidity, promote market diversification, and support value addition. 'While this injection can help tide over some immediate financial distress, industry experts warn it cannot fully compensate for the cost disadvantage created by the high US tariffs and ongoing oversupply and price drops due to Ecuador's surge in production and exports,' he said.
Economic Times
4 days ago
- Business
- Economic Times
50% tariffs: Here's how India can flip the script on Trump's trade offensive
Synopsis India is preparing to counter the impact of Trump's 50% tariff through alternative markets and dedicated fund support, as key sectors such as textiles, gems & jewellery, and shrimp brace for the impact. With the India-US Bilateral Trade Agreement at a standstill despite several rounds of negotiations, industry leaders and experts are exploring ways to contain the tariff impact. As US President Donald Trump hit India on Wednesday with an additional 25% tariff for purchasing Russian oil, raising the total tariff to 50%, Indian businesses and exporters are bracing for the economic repercussions. In response, experts and industry leaders are actively discussing measures to mitigate the impact of these tariff US is a major trading partner of India. In FY25, India exported products valued at $86.51 billion to the US across various categories, including shrimp, textiles, and gems and jewellery. With the India-US Bilateral Trade Agreement at a standstill despite several rounds of negotiations, industry leaders and experts are exploring ways to contain the tariff Indian government is reportedly preparing a Rs 20,000 crore export promotion mission aimed at protecting exporters from global trade uncertainties. This mission is being jointly implemented by the ministries of commerce and industry, micro, small and medium enterprises (MSME), and finance. It is expected to be finalised by August and come into effect by mission, according to sources, will have five components—trade finance, non-trade finance dealing with regulation, standards and market access, better brand recall for Brand India, e-commerce hubs and warehousing, and trade facilitation. Ajay Sahai, DG & CEO of the Federation of Indian Export Organisations (FIEO), explained that when the mission was announced in the Union Budget this year, it aimed to increase access to export credit. From that perspective, there may be some softening of collateral on one hand; there may also be an element of the Interest Equalisation Scheme. 'We have also requested that the Interest Equalisation Scheme for MSME manufacturers be extended to all countries, with a specific emphasis on ensuring that all exporters receive this support for exports to the US, as it will enhance their competitiveness,' he said. He noted that there is a temporary problem, assuming that by September-October this year, India and the US are able to work out the Bilateral Trade Agreement (BTA). However, he pointed out that any losses faced by Indian exporters will be for a limited duration. 'The good thing is that in that scenario, both buyers and sellers want to maintain the equation, and both sides want to look at absorbing the cost. They can look at increasing productivity.'However, 'they have been forced to be innovative' due to Trump tariffs, so there is always a silver lining in all these things as well,' he said. 'Even if the replacement of the US market happens, it will take time. If we are not through with the BTA, we must be prepared for some setbacks in exports. That is undeniable,' he Taneja, Professor, ICRIER, asserted that allocating a dedicated fund to support and shield exporters from the disruptions caused by US tariffs is a commendable and timely initiative. 'This is much in line with what countries like Australia, Spain, and South Korea are doing. The Australian government announced a $1-billion zero‑interest loan package to support businesses facing market disruptions. Spain has combined direct aid and soft loans in its proposed relief package. Similarly, the South Korean EXIM Bank manages the Supply Chain Resilience Fund (SCRF), allowing exporters to respond swiftly to trade wars and geopolitical conflicts,' she a similar view, Shravan Shetty, Managing Director, Primus Partners, said that the fund can prove beneficial, especially for vulnerable segments like textiles, gems & jewellery, and auto ancillaries, wherein production-linked schemes can help provide relief. 'The funds can also be deployed for strategic trade promotion activities and brand-building in alternate markets, such as Africa, the UK, the European Union, and Central Asia,' he Sen, Trade Policy Leader at EY India, emphasised the importance of understanding what percentage of this fund percolates down to the actual exporters who need it. This is important, given the undefined nature of the new Trump tariff regime, he said. 'The arbitrage possible between exports of the same product from different countries; the lack of finality in the rates; the definitional issues, such as what would be considered as 'transhipping', etc., make a structured support scheme difficult to formulate. In case we see a significant downturn in US demand, the amounts from the fund would be needed to explore newer markets,' he also noted the necessity of placing greater emphasis on countries with which we have recently signed FTAs, as they remain underutilised. 'We have one with the UK that will be operationalised; now is the time to start focusing on the UK market and the EU, where an early harvest is expected in the coming months.''So, I think the strategy should be focusing on diversification because with the kind of tariff that has been imposed by the US and the threat issued every day, we cannot rely on the US. Even if BTA happens and an additional tariff in the form of India's relations with Russia is imposed, we can be subjected to any kind of tariff. So, this is the time we should look at diversification in the medium to long term. And we should exploit opportunities with FTAs,' he mentioned that the fund relief and the development of alternative markets will only help in the short to medium term. India must build structural competitiveness and export reliance frameworks in the long term, he said. 'The answer lies in building an export ecosystem that can withstand geopolitical shocks, price wars, and shifting consumer preferences.'He proposed that the government should provide MSMEs and exporters with digital platforms and single windows to facilitate export credit, insurance, and risk cover, while noting that many smaller firms lack awareness or access to EXIM Bank schemes, ECGC support, or interest equalisation benefits. 'Digitising access and simplifying application processes can significantly boost participation,' he other measures, officials have indicated that lowering testing charges for smaller exporters, levied by the Export Inspection Council, can ease exporters' concerns. Additionally, measures like providing customs relief, accelerating GST for exports and increasing RoDTEP can also mitigate tariff impacts, as per industry RoDTEP and RoSCTL schemes, as per Sen of EY India, should be expanded to cover all exports between them. He said that increasing the RoDTEP/RoSCTL rates to directly refund a wider range of embedded taxes and duties not covered by other schemes would reduce overall production costs for exporters, enhance the price competitiveness of their products in the international market and partially alleviate the tariff Kumar Gulati, Chairman at the Compound Livestock Feed Manufacturers Association (CLFMA) of India, said that lowering the charges and simplifying the process for mandatory testing and certification (especially for food, agriculture, pharma, and chemicals) significantly reduces compliance costs. 'It's particularly vital for smaller exporters and for sectors with low margins, directly supporting their ability to remain price-competitive internationally,' he said. Sector-specific Looking at the sectors, textiles could be one of the worst hit with $4 billion of business, such as t-shirts and home textiles bearing the brunt, especially due to lower tariffs imposed on India's rivals—Bangladesh and Vietnam at 20%. At 50%, US tariffs on India are now the highest Thakur, Secretary General of the Apparel Export Promotion Council, commended the 'expected' export promotion mission and suggested an increase in the mission budget, which is currently set at Rs 20,000 crore. He also recommended including specific measures for the textile sector in the mission, considering that the sector is the second-largest employer after agriculture in the country.'We need incentives to offset India's cost disadvantage vis-à-vis competing countries,' he said, adding that 'reviving the Interest Equalisation Scheme for five years at an enhanced rate of 5% for all exporters, without any value cap, is crucial.' He emphasised the need for continuity of schemes such as RoSCTL, a moratorium on loan repayments, expedited India-EU trade negotiations, and the quick disbursal of outstanding dues and claims from shrimp exports, totalling nearly $7 billion, to the US could suffer significantly. Even before the new tariffs, Indian seafood exporters were facing stiff price competition and falling prices thanks to increased supply from Ecuador (which faces only a 10-14% tariff).'Shrimp prices dipped by 20-25% in the last year. The oversupply continues to depress global prices, which further erodes profits and export earnings for Indian producers. It's estimated that Indian exporters are already facing losses of Rs 600 crore due to order cancellations and containers stuck in transit as these tariffs take effect. Margins in the industry are a slim 4-5%, making it impossible to absorb such steep tariff hikes, and exporters fear a significant long-term loss of market share, with Ecuador likely to replace India as the top shrimp supplier to the US,' pointed out added that the government's Rs 20,000-crore scheme will focus on making export credit accessible, enhancing brand building, and addressing non-tariff barriers. The aim is to provide liquidity, promote market diversification, and support value addition. 'While this injection can help tide over some immediate financial distress, industry experts warn it cannot fully compensate for the cost disadvantage created by the high US tariffs and ongoing oversupply and price drops due to Ecuador's surge in production and exports,' he said.
Hans India
16-06-2025
- Business
- Hans India
India's services exports shine amid global challenges: FIEO
New Delhi: India's latest trade figures reflect the robust performance of its services sector, which continues to act as a buffer against the challenges of muted global demand, geopolitical tensions, and high interest rates, the Federation of Indian Export Organisations (FIEO) said on Monday. Despite global economic headwinds, India's overall exports (merchandise and services combined) demonstrated resilience, registering a 2.8 per cent growth in May 2025. Total exports reached $71.12 billion, up from $69.20 billion in May 2024. 'This uptick was primarily driven by continued strength in services exports, particularly in software, consultancy, and financial services,' said SC Ralhan, President, FIEO. 'Exporters are adapting well to a tough global environment. The ability to sustain export growth despite logistical disruptions, especially in the Middle East, is a testament to the sector's agility and policy support,' said Ralhan. Overall imports (goods + services) saw a marginal dip to $77.75 billion, compared to $78.55 billion in May 2024, suggesting stable domestic demand for essential inputs and services. Ralhan pointed out that the decline in merchandise imports could also reflect growing success in import substitution and domestic capacity building, aligned with the government's push for self-reliance. To sustain and accelerate export growth, the FIEO President emphasised the urgent need for continued support for MSMEs through the Interest Equalisation Scheme; Expedited Free Trade Agreement (FTA) negotiations to boost market access particularly BTA with US; simplification and digitisation of trade procedures to reduce transaction costs; and making e-commerce exports seamless by addressing various procedural issues. Looking ahead, Ralhan urged the government to maintain a sharp focus on sector-specific issues, and capitalise on India's growing services strength by investing in digital infrastructure, talent development, and targeted global promotion. 'With appropriate policy interventions and global conditions expected to stabilize in the second half of 2025, India is well-positioned to regain a strong export growth trajectory,' he noted.
Time of India
04-05-2025
- Business
- Time of India
FIEO urges RBI to publicly share info on banks offering rupee trade
Apex exporters' body FIEO has urged the RBI to publicly share information on banks offering the rupee trade settlement system ( SRVA ) as lack of awareness is limiting its use. The system simplifies trade and saves foreign exchange, but many exporters do not know where to access it, Federation of Indian Export Organisations (FIEO) President S C Ralhan told PTI. #Pahalgam Terrorist Attack India much better equipped to target cross-border terror since Balakot India conducts maiden flight-trials of stratospheric airship platform Pakistan shuts ports for Indian ships after New Delhi bans imports from Islamabad In 2023, the Reserve Bank permitted banks operating in the country to open Special Rupee Vostro Accounts (SRVAs) of partner banks from specified countries as part of efforts to promote bilateral trade in local currencies. This enables exporters and importers to invoice and pay in their respective domestic currencies enabling the development of a bilateral foreign exchange market. Continue to video 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by This system makes it easier to trade with some countries in rupees instead of dollars or euros, "but many exporters don't even know which banks offer this service, because that information isn't easily available. The RBI should make this public. Better awareness means better use of this good initiative," Ralhan said. He raised the issue among others during his meeting with RBI Governor Sanjay Malhotra last week in Mumbai. Live Events He also said there are instances where banks have approved loans for exporters, but only about 35-40 per cent of it is actually used. "Often it's because the process to access these funds is complicated, slow, or unclear. It's like being told you can have a loan, but then being made to jump through so many hoops that you give up. We need to fix this so exporters can actually use the money that's been approved for them," the Ludhiana-based exporter said. On high interest rates, he said that Indian exporters, particularly small and medium ones, should be able to compete fairly with businesses from other countries. "But right now, they are at a disadvantage because borrowing money (credit) is too expensive for them. The credit cost has become more important as the payment period has been extended by buyers facing liquidity challenges," he said, adding that many countries help their exporters with cheaper loans or subsidies. In India, without schemes like interest equalisation (which makes loans cheaper), domestic exporters are struggling to match prices with global competitors. The high cost of borrowing makes products more expensive and less attractive in the international markets. Ralhan sought support of the RBI for immediately rolling out the Interest Equalisation Scheme . He has also flagged that the country's exports are growing but the credit support (loans and financial backing) that exporters need is not growing at the same pace. "The RBI governor responded positively to all our requests and he has assured us to look into all the matters," Ralhan said. India's exports turned positive after four months, recording a marginal 0.7 per cent increase to USD 41.97 billion in March, while overall exports of goods and services touched an all-time high of USD 824.9 billion in the last fiscal despite global economic uncertainties. Cumulatively, during 2024-25 (April-March), the country's exports moved up by 0.08 per cent to USD 437.42 billion. Services shipments have reached an all-time high of USD 387.5 billion in 2024-25.
