New Delhi: The Federation of Indian Export Organisations (FIEO) has voiced significant concerns regarding the US government’s implementation of an additional 25 percent tariff on Indian-origin goods, which has raised total duties on numerous export categories to as high as 50 percent, effective Friday. FIEO president SC Ralhan characterized this measure as a ‘setback.’ He indicated that the tariff hike could severely affect India’s exports to the US, as approximately 55 percent of India’s shipments to the US, valued at $47–48 billion, are now subject to pricing disadvantages of 30–35 percent, making them less competitive compared to rivals from China, Vietnam, Cambodia, the Philippines, and other Southeast and South Asian nations.
Production has been halted among textiles and apparel manufacturers in Tiruppur (Tamil Nadu), Noida (UP), and Surat (Gujarat) due to diminishing cost competitiveness. This sector is losing market share to lower-cost competitors from Vietnam and Bangladesh. In the seafood segment, particularly for shrimp, the tariff increase poses risks of stockpile losses, disrupted supply chains, and heightened distress for farmers, as the US market accounts for nearly 40 percent of India’s marine exports. Ralhan noted that other labor-intensive exports like leather, ceramics, chemicals, handicrafts, and carpets are experiencing a sharp decline in competitiveness, especially against producers from Europe, Southeast Asia, and Mexico. The looming threats of delays, order cancellations, and diminished cost advantages are significant for these industries.
In light of the current situation, the FIEO chief emphasized the necessity for immediate government intervention, which should include promoting interest subvention schemes and providing export credit support to maintain working capital and liquidity. He also called for easier access to low-cost credit, particularly for MSMEs, with backing from banks and financial institutions, along with a special directive from both the Government and the Reserve Bank of India. Ralhan further requested a one-year moratorium on principal and interest payments for loans. Additionally, he suggested automatically increasing the existing credit limit by 30 percent and facilitating collateral-free lending along the lines of the ECLGS to alleviate the financial stress faced by these companies without imposing significant burdens on the government budget.