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Mint
4 days ago
- Business
- Mint
India plans compliance reforms, seamless GST refunds, PLI fixes to woo investors
New Delhi: The government is working on a plan to substantially ease compliance burdens and eliminate policy bottlenecks as well as procedural hurdles to attract investments, after India's talks for a trade agreement with the US stalled over the latter's demand for greater market access to the politically-sensitive agriculture and dairy sectors. The government has asked 37 of its ministries to submit a detailed report on the key compliance requirements that are creating roadblocks for manufacturers, exporters, investors and small enterprises, hurting their ability to conduct their businesses smoothly, three government officials directly involved in the ongoing consultations said on the condition of anonymity. One of the key areas under discussion to strengthen the domestic manufacturing base is reforming the GST reimbursement mechanism on the lines of the income tax refund, where an assessee gets refunds soon after the verification of their returns in an automatic, seamless manner, the first of the three officials cited earlier said. During discussions with officials from various ministries and separately with exporters and manufacturers, a critical concern that was flagged was the absence of an automatic refund mechanism after disputes flagged with a red alert notice are resolved, the second person said. 'Traders currently have to apply afresh to claim refunds even after the dispute is settled and the red alert is removed, creating an unnecessary compliance burden." Queries sent to the ministries of commerce, finance, external affairs, the prime minister's office, and the GST secretariat remained unanswered till press time. There remain a few challenges for GST refunds, particularly for exporters and MSMEs (micro, small and medium enterprises), such as delays in refunds, and procedural complexities that need to be addressed, Hemant Jain, president, PHD Chamber of Commerce and Industry, said. 'For traders, these delays directly translate into higher financial costs, reduced competitiveness, and uncertainty in fulfilling orders. Removing these hurdles will not only improve the ease of doing business but also bolster India's trade efficiency and export growth, especially with rising geopolitical uncertainties," Jain added. As talks with the US for the bilateral trade agreement (BTA) hit a stalemate, president Donald Trump imposed an additional 25% punitive tariff on India for buying Russian oil and weapons, taking the total import duty on Indian goods to 50%. The government is leveraging this trade crisis to fast-track ease-of-doing-business reforms, including a single-window clearance system inspired by passport services, and simplified procedures for land acquisition and contract management, according to a Mint report on 9 August. As of 30 June, total direct and indirect tax arrears in India amounted to over ₹54.53 trillion, the government informed Parliament on 5 August. In a written reply to a question in the Rajya Sabha, minister of state for finance Pankaj Chaudhary stated that pending indirect tax arrears stood at more than ₹7.01 trillion, while direct tax arrears were over ₹47.52 trillion. 'The delay in processing GST refunds has been a significant concern for businesses, particularly exporters and manufacturers, as it affects their working capital and cash flow," said Abhash Kumar, trade economist and assistant professor of economics at Delhi University. 'Other proposals include easing incentives reimbursement norms, softening rules for opening bank accounts for Overseas Citizen of India (OCI) card holders, and removing redundant approvals for foreign investors," said the third person. The government is also keen on simplifying the claims procedures under the production-linked incentive (PLI) scheme, designed to boost domestic manufacturing. 'Easing procedural challenges in claiming incentives under the PLI scheme is a key focus for the government. The aim is to make the process hassle-free, encouraging more investments that will boost the manufacturing sector and create employment opportunities," this person added. The priority is to maintain the momentum of manufacturing to boost employment and sustain domestic consumption, this person said. Perhaps due to the cumbersome process of claiming incentives under the PLI scheme, many beneficiaries are hesitant to come forward and claim their dues. As a result, as of June 2025, only ₹21,534 crore of the allocated ₹1.90 trillion had been disbursed, with companies producing just 37% of the targeted goods. The PLI schemes, covering sectors such as electronics, pharmaceuticals, food processing, and specialty steel, have attracted investments totaling ₹1.76 trillion and generated over 1.2 million direct and indirect jobs. The disbursement has been uneven across sectors. For instance, the electronics and pharmaceutical sectors received about 70% of the total incentives for FY25, amounting to ₹5,732 crore and ₹2,328 crore, respectively. In contrast, the telecom sector has seen a slower uptake, with only 21 out of 42 eligible firms receiving a total of ₹1,162 crore in incentives as of 31 March. As the government discusses a comprehensive policy reset to boost manufacturing and attract investment, it is also consulting export promotion councils and manufacturers to rework India's export strategy, according to a Mint report dated 2 August. This development follows a deadlock in the BTA negotiations between India and the US, which have been ongoing since June, Mint reported on 11 June. The new export plan focuses on diversifying into key markets where India has or is close to finalizing free trade agreements (FTAs), including the UK, with which India recently signed an FTA, and the European Union, where talks are in the final stages with a deal expected before year-end. Other target markets include the UAE, Australia, Japan, and South Korea, all of which have existing FTAs with India. The measures are an attempt to protect India's economic growth, which some economists fear could slip by 20 to 30 basis points to around 6.2% in the current fiscal year if the new tariffs are enacted. 'The impact on GDP may not be dramatic, but we could see growth closer to 6.2–6.3% in FY26," said Madan Sabnavis, chief economist at Bank of Baroda. Key sectors such as textiles, which accounts for $10.91 billion in exports to the US, engineering goods ($19.16 billion), agriculture ($2.53 billion), gems and jewellery ($9.94 billion), leather ($948.47 million), marine products ($2.68 billion), and plastics ($1.92 billion) could face serious trouble if the 50% US tariff continues for along. Exports in these categories could fall by as much as 40% if the 50% tariff remains in place for an extended period. India exported goods worth $86.5 billion to the US in FY25, accounting for 20% of the country's total merchandise exports of $433.56 billion during the year. India's total agricultural exports to the US stood at $2.53 billion in FY25, up 19.3% from $2.12 billion in FY24.
India Today
07-08-2025
- Business
- India Today
Trump hits India with 50% tariffs: What's at stake and what next?
The US has imposed a sweeping 50% tariff on Indian exports, pushing US-India trade tensions to a rare low in over two decades. The move primarily targets India's imports of Russian oil, which Washington claims is funding Russia's war in 55% of India's exports to the US will face these tariffs, affecting key sectors such as textiles, gems and jewellery, leather goods, auto parts, and 2024, India will export around $87 billion worth of goods to the US, its largest export market. These tariffs place Indian exporters at a 30-35% cost disadvantage compared to competitors like Vietnam and Bangladesh, who face much lower US duties. The impact is severe for India's export-dependent economy. Experts describe this as the worst crisis in recent US-India Kugelman of the Wilson Centre called it 'the worst crisis' in two decades of strategic ties, warning about the widespread disruptions it could cause, although he noted that the broader relationship still retains the additional tariffs, there were some immediate effects. The Indian rupee weakened, and stocks of export-reliant companies dropped. Reports indicate US buyers have begun pausing Indian orders, seeking alternative suppliers in countries like Vietnam and warn that without quick resolution, these sudden tariffs could trigger supply chain disruptions and substantial layoffs in labour-intensive MAINTAINS STANDThe Indian government has strongly objected to the tariffs, calling them 'unfair, unjustified, and unreasonable.' Officials stressed that India's oil imports from Russia are driven by the need to ensure energy security for its 1.4 billion people amid a volatile global Ministry of External Affairs highlighted that other countries also import Russian oil and accused the US of unfairly singling out India. While trade talks remain stalled, a 21-day window before the second tranche of tariffs take effect offers limited scope for diplomatic engagement and possible partial rollback if India amends its Russian oil tariff escalation comes at a time when India and the US had been engaging in trade talks, which collapsed over contentious issues such as India's unwillingness to open sensitive agricultural sectors to US administration had pushed for slashing India's trade surplus and increasing market access, but stalled negotiations ended with the ON INDIAEconomists estimate the direct impact on India's GDP growth may be moderate—a contraction of about 0.2 to 0.6 percentage points in 2025, but warn the damage to export sectors and employment may be much PHD Chamber of Commerce report projects the tariffs will initially hit $8 billion of Indian exports, with wider economic effects as duties take full major industries like auto components, which export about $7 billion annually to the US, also face exposure to these tariffs, threatening jobs and electronics and pharmaceuticals are exempted for now, crucial manufacturing and labour-intensive sectors bear the HAPPENS NEXT?Political leaders and business voices in India call for rapid market diversification toward Europe and Asia to reduce dependency on the US. Senior Congress leader Shashi Tharoor called the tariffs a 'blow' that will make Indian goods unaffordable in the US and urged urgent expansion into alternative markets with existing free trade Minister Narendra Modi and officials have vowed to protect farmers, fishermen, and workers, emphasising national interest and energy the new tariffs could have a devastating impact on India's export sector, some voices in Indian industry are calling for a bold pivot. Business leader Anand Mahindra argues the moment could act as a trigger—much like the 1991 crisis—for long-overdue structural reforms that could transform India's economic 50% tariff marks a key turning point in US-India trade ties, testing both economic resilience and political resolve. The next three weeks will be crucial, as New Delhi weighs how to protect energy security while defending export revenues and jobs.- EndsTune InMust Watch
Economic Times
06-08-2025
- Business
- Economic Times
Tariff to have negligible impact; diversification remains key: PHDCCI
Synopsis Donald Trump's tariffs on Indian imports are projected to have a minimal effect on India's GDP, impacting only 1.87% of total merchandise exports. PHDCCI suggests that India should focus on diversifying bilateral trade agreements to mitigate geopolitical uncertainty and growing protectionism. This strategy will help navigate global trade challenges. AP A container ship (Image for representation) New Delhi: The 25% tariffs on Indian imports announced by Donald Trump, the US President, are likely to have a negligible impact on India's GDP, with PHDCCI suggesting diversification in bilateral trade agreements as a strategy for the country to navigate geopolitical uncertainty and growing tariffs are 'estimated to impact 1.87% of India's total global merchandise exports and a negligible 0.19% on India's GDP,' according to a study released by PHD Chamber of Commerce and Industry (PHDCCI) on the tariffs are expected to make some dent in India's exports, their impact remains manageable for India.'Our analysis shows the impact remains manageable at the macro level. This presents an opportunity for Indian businesses to accelerate market diversification and value addition strategies,' said Ranjeet Mehta, CEO & SG, top five Indian sectors in the US's export share in FY25 were engineering goods, electronic goods, pharmaceuticals, gems & jewellery and Ready-made garments. Speaking during media interaction, Sanat Kumar, Chief Economist at PHDCCI, said, 'diversification in bilateral trade agreements for India remains the key to tide over this uncertainty surrounding the global trade.'India should aim to execute as many bilateral trade agreements, keeping its national interest in mind, he added.
NDTV
06-08-2025
- Business
- NDTV
US Tariffs To Have Minimal Effect On India's GDP, Exports: Study
New Delhi: The 25 per cent tariffs on Indian goods announced by US President Donald Trump will have "negligible" impact on the country's GDP as only USD 8.1 billion of exports to America might get affected, according to a PHDCCI study released on Wednesday. The tariffs announced by the US are likely to come into effect on August 7, 2025. The paper, released by the PHD Chamber of Commerce and Industry (PHDCCI), also recommends a series of measures to mitigate the impact of US tariffs. "Our analysis indicates that there will be an estimated impact of only 1.87 per cent on India's total global merchandise exports and a negligible 0.19 per cent on India's GDP as a result of a 25 per cent tariff announced by the US on India," said Hemant Jain, President, PHDCCI. The study said the total potential export impact is estimated at USD 8.1 billion based on 2024-25 merchandise exports of USD 86.5 billion (1.87 per cent of India's total global export). Among other sectors, the study said the levies would impact engineering goods (USD 1.8 billion), gems and jewellery (USD 932 million), and ready-made garments (USD 500 million). In the wake of the US tariffs, the industry body has recommended several measures, including increasing market penetration, product development and market diversification. It suggested that stakeholders should negotiate bundled-pricing deals (textiles plus accessories) to absorb some tariff cost and maintain shelf-price competitiveness. "Leverage Indian exodus networks (trade fairs, cultural events) to boost volume with existing buyers under current product portfolios," it said. PHDCCI also made a strong case for investments in joint ventures with US firms to produce tariff-sensitive goods on-shore, thereby converting exports into high-value services and intellectual property (IP) licensing.
Mint
06-08-2025
- Business
- Mint
India can withstand US tariff shock, economic fundamentals strong, says industry body PHD Chamber
New Delhi: India's trade resilience remains strong despite the 25% tariff imposed by US President Donald Trump on Indian goods, with the country's broader export base and strong domestic fundamentals helping buffer the shock, industry body PHD Chamber of Commerce and Industry (PHDCCI) said. A white paper released by the industry body estimates that while the tariff will affect around $8.1 billion worth of exports to the US, the overall impact on India's economy is expected to be limited, with a projected GDP hit of just 0.19%. 'Our analysis indicates that there will be an estimated impact of only 1.87% on India's total global merchandise exports and a negligible 0.19% on India's GDP,' said Hemant Jain, president of PHDCCI. He added that India continues to be the fastest-growing major economy in the world, with the IMF projecting 6.4% growth in 2025–26. The tariff, which affects a wide range of Indian goods entering the US market, has drawn particular concern from sectors such as engineering goods, electronics, pharmaceuticals, gems and jewellery, and ready-made garments. According to PHDCCI estimates, the engineering sector faces the largest exposure at $1.8 billion, followed by electronics at $1.4 billion, pharmaceuticals at $986 million, gems and jewellery at $932 million, and apparel at $500 million. In response, the chamber has proposed a four-pronged strategy to mitigate the fallout. These include negotiating bundled pricing with major U.S. retailers like Walmart and Amazon, developing premium variants of export products, redirecting trade volumes to other markets such as the EU, Canada, and Latin America, and encouraging joint ventures for on-shore production in the U.S. 'The tariff challenge accelerates India's need for export sophistication and geographic diversification. Our strategy framework provides a roadmap for converting this disruption into an opportunity for long-term competitiveness enhancement,' said Jain. Ranjeet Mehta, CEO and secretary general of PHDCCI, added that India's diversified economy and strong domestic demand offer a cushion against external shocks. 'While the 25% U.S. tariff presents challenges, our analysis shows the impact remains manageable at the macro level,' he said. India exported $86.5 billion worth of goods to the U.S. in FY25, making it the country's largest export destination. With U.S. tariffs now affecting close to 10% of India's total exports to that market, the industry is closely watching whether further escalation will follow, particularly after Trump warned of doubling down on countries that continue to import Russian oil. Despite the uncertainty, PHDCCI highlighted India's rising competitiveness in sectors like electronics, which recorded a 50.7% compound annual growth rate between FY2020 and FY2025. It also flagged strong performance in the agri-food sector, with double-digit export growth reflecting robust global demand. Based on a price elasticity of –0.5 and a 25% tariff, India is estimated to lose about $8.1 billion in exports to the US across various sectors in FY2026. Within this, the export of fruits and vegetables, valued at $331.47 million, could see a potential loss of $31.08 million. Meat, dairy, and poultry products, which together contributed $206.83 million in export value, are projected to face a loss of $19.39 million. Tea exports may decline by $8.71 million from their FY2025 level of $92.95 million, while jute manufacturing including floor coverings could see a $8.34 million hit on $88.97 million in exports. Tobacco exports, worth $86.89 million, may incur a loss of $8.15 million, and coffee exports could be reduced by $7.68 million from a base of $81.89 million. Oil seeds and oil meals, with export values of $59.57 million and $17.33 million respectively, may suffer losses of $5.58 million and $1.62 million. Cashew exports, at $7.81 million, could shrink by $0.73 million, while exports of other cereals are likely to dip by $0.46 million from a total of $4.96 million. The cumulative estimated loss across all affected commodities stands at $8.11 billion. 'The US' decision to impose a 25% tariff on select Indian exports appears largely symbolic — more than half of the $132 billion trade remains unaffected, and the estimated GDP impact is minimal at 0.2–0.4%. Crucially, dairy has been excluded from any duty cuts, reaffirming its strategic role in India's rural economy and long-term national self-reliance,' said Ravin Saluja, Director of Sterling Agro Industries Ltd. (Nova Dairy).
