US action will push India to reconsider its strategic alignment, deepening ties with Russia, China, and many other countries, finds GTRI.
Chennai: The 21-day period for the oil tariff indicates that the US wants India to negotiate and hence the industry is optimistic that the final rate will be much lower. While many want India to keep negotiations going on a firm foot, they expect the government to provide relief to exporters to mitigate losses.
“The additional duty, above the current 25 per cent, will take effect in 21 days, suggesting that the decision leaves room for negotiations,” said Pankaj Chadha, chairman, EEPC.
“I am hopeful that ultimately the rate that is being fixed will be much lower than the current 50 per cent which has been threatened,” said Rahul Mehta, Chief Mentor of Clothing Manufacturers Association of India (CMAI).
US action will push India to reconsider its strategic alignment, deepening ties with Russia, China, and many other countries, finds GTRI.
The industry should speed up market access to non-US markets such as the EU, take full advantage of the FTA to be signed with the UK, perhaps diversify into the South American markets, the Middle East and African markets, the Australia and New Zealand markets.
However, for the time being industry wants the government to come to its rescue. “I doubt whether we can eliminate or avoid immediate losses. But at least the government and the industry should work together to ensure that the industry is not completely destabilized by these actions of the US government,” said Mehta.
The Interest Equalization Scheme which provides rebate on the interest paid for the credit availed by exporters was discontinued last year.
"Relaunch the scheme with a Rs 15,000 crore annual budget and a five-year commitment to provide subsidised credit for exporters, especially MSMEs. This would lower borrowing costs, improve competitiveness, and provide immediate relief," said Ajay Srivastava, founder, GTRI.
According to K Unnikrishnan, deputy director general of FIEO, the government should restore the interest subvention rates to 5 per cent for MSMEs and 3.5 per cent for non-MSMEs. The government has earmarked Rs 2,250 crore for export promotion schemes, down 17 per cent from FY25. The government will have to raise the funds for export schemes.
Moreover, the government should bring down the import duties and ease Quality Control Order norms on several raw materials that increase the cost of the end-product.
The government should take up the much-delayed SEZ reforms and allow units to offload their stocks in domestic markets without duties, boost ecommerce sales, and direct lenders to defer interest on working capital facilities by six months from 1st August 2025. Exporters also sought part refund on logistics charges and a Market Development Fund.
