Immediate Support Needed for Indian Exporters Amid U.S. and Global Tariff Impacts

India Braces for Impact of New US Tariffs, Industry Seeks Government Aid

New Delhi, August 27, 2025 – The Federation of export Organizations of India (FIEO) has urgently appealed to the Indian Government for immediate assistance to businesses as the United States’ escalated tariffs take affect Wednesday. these new tariffs, reaching a total of 50% on specific products, are linked to india’s continued imports of Russian oil.

Industry Concerns and Proposed relief Measures

The FIEO voiced “maximum concern” over the tariffs and proposed a thorough relief package. This includes programs offering interest subsidies, bolstering export credit to ensure liquidity, and implementing a one-year moratorium on loan payments for Small and Medium-sized Enterprises (SMEs). SC ralhan, the director of FIEO, emphasized the crucial need for swift governmental intervention to maintain working capital and liquidity for exporters.

Accelerating Trade Negotiations

Alongside direct financial support, the FIEO urged the acceleration of ongoing trade agreement negotiations with key partners. These include the European Union, Oman, Chile, Peru, Gulf nations, African countries, and various Latin American markets. The association also stressed the importance of initiating urgent diplomatic discussions with the United States to de-escalate the situation.

Production Disruptions Already Reported

The impact is already being felt, with reports of production halts in key manufacturing hubs. Textile manufacturers in Trerupur, Noida, and Surat have reportedly suspended operations, citing an inability to compete with rivals from Bangladesh and Vietnam under the new tariff regime. According to a recent report by the Ministry of Textiles, India’s textile exports experienced a 2.5% decline in the last quarter, a trend expected to worsen with the imposed tariffs.

Sector-Specific Impacts

Several sectors are expected to be particularly vulnerable. The gems and jewelry industry,along with seafood exporters,face significant challenges. Conversely, sectors with considerable U.S. interests, like pharmaceuticals and electronics, have been exempted from the new taxes. Shrimp exports,absorbing nearly 40% of India’s seafood shipments to the U.S., are at risk of stock losses and supply chain disruptions, according to FIEO officials.

Sector	Impact Level	Key Concern
Textiles	High	Loss of competitiveness; production halts
Gems & Jewelry	high	Reduced demand in US market
Seafood (Shrimp)	High	Stock losses; supply chain disruptions
Pharmaceuticals	Low	Exempted from tariffs
Electronics	Low	exempted from tariffs

the 50% tariffs stem from two separate actions by the White House. A 25% rate imposed on July 7th addressed perceived “commercial imbalances,” while the additional 25% punitive tax, enacted today, directly targets imports of Russian oil. Did You Know? The United States is India’s largest trading partner, accounting for approximately 11.5% of India’s total trade in 2024.

prime minister Narendra Modi has indicated India’s intention to engage with the U.S. regarding the tariff pressures. The central bank of India has also expressed its commitment to supporting sectors affected by the new tariffs. Pro Tip: Indian exporters should proactively diversify their export markets to reduce reliance on the U.S. market and mitigate future tariff risks.

Understanding Trade tariffs and Their Impact

Trade tariffs are taxes imposed on imported or exported goods. They are often used as a tool in international trade disputes or to protect domestic industries. However, tariffs can also lead to higher prices for consumers, reduced trade volume, and economic disruption. The current situation highlights the complexities of global trade and the interconnectedness of national economies.

The long-term effects of these tariffs will depend on several factors, including the duration of the tariffs, the response of Indian exporters, and the outcome of ongoing trade negotiations. The Indian government’s ability to provide effective support to affected industries will also be crucial.

Frequently Asked Questions

• What are the new US tariffs on Indian products? The US has imposed a total tariff of 50% on certain Indian products, stemming from both commercial imbalances and imports of Russian oil.
• Which sectors in India are most affected by these tariffs? The textile, gems and jewelry, and seafood industries are expected to be the most significantly impacted.
• What is FIEO’s response to the new tariffs? FIEO has requested immediate government support for exporters, including interest subsidies and a moratorium on loan payments.
• Is the pharmaceutical sector impacted by the tariffs? No, the pharmaceutical sector has been exempted from the new tariffs.
• What is India doing to address the situation? prime Minister Modi has pledged to engage with the US, and the central bank has promised support to affected industries.

What steps do you think India should take to mitigate the economic fallout from these tariffs? Share your thoughts in the comments below, and share this article with your network to raise awareness about this crucial issue.

What specific financial assistance programs are currently available to Indian exporters directly impacted by U.S. and global tariffs?

Understanding the Current Landscape of Trade Tariffs

The escalating trade tensions, notably between the U.S. and China, alongside broader global tariff implementations, are creating significant headwinds for Indian exporters. These aren’t isolated incidents; they represent a systemic shift in global trade policy demanding immediate and strategic responses. Increased tariffs directly impact the cost competitiveness of Indian goods in key markets, eroding profit margins and perhaps leading to order cancellations. Sectors like steel, textiles, engineering goods, and pharmaceuticals – major contributors to India’s export revenue – are particularly vulnerable. The ripple effect extends to related industries and supply chains.

Key Sectors Facing the Brunt of Tariff Hikes

Several Indian export sectors are experiencing acute pressure due to the current tariff environment. Here’s a breakdown:

Steel: U.S. tariffs on steel imports have considerably impacted Indian steel exporters, forcing them to either absorb the cost or seek alternative markets. This has led to a decline in steel exports to the U.S.

Textiles & Apparel: While benefiting initially from the U.S.-China trade war, the textile sector now faces increased competition from other Southeast Asian nations and potential retaliatory tariffs.

engineering Goods: Tariffs on engineering goods, including auto components and machinery, are impacting export volumes to both the U.S. and Europe.

Pharmaceuticals: Increased scrutiny and potential tariffs on pharmaceutical ingredients and finished products pose a threat to India’s position as a major pharmaceutical exporter. Generic drug manufacturers are especially concerned.

Agriculture: Export of agricultural products like rice,spices,and fruits & vegetables are also affected due to trade disputes and non-tariff barriers.

Government Initiatives & Existing Support Mechanisms

The Indian government has implemented several measures to support exporters, but a more thorough and proactive approach is needed. Current initiatives include:

1. Export Promotion Schemes: Schemes like the Duty Entitlement Passbook Scheme (DEPB) – though discontinued – and the Merchandise Exports from India Scheme (MEIS) aim to provide duty benefits to exporters. The Remission of Duties and Taxes on Exported Products (RoDTE) scheme is a more recent and significant step.
2. Export Infrastructure Advancement: Investments in port infrastructure, logistics, and warehousing facilities are crucial for reducing export costs and improving efficiency.
3. Trade Agreements: Actively pursuing and negotiating Free Trade Agreements (FTAs) with key trading partners is vital for securing preferential market access. Recent FTAs with UAE and Australia are positive steps.
4. export Credit Guarantee Corporation of india (ECGC): ECGC provides export credit insurance to protect exporters against losses due to non-payment by foreign buyers.
5. Interest Subvention Scheme: Offers subsidized interest rates on export credit, reducing the financial burden on exporters.

Urgent Measures Required: A Call to Action

Despite existing support, the current situation demands more immediate and targeted interventions.

Enhanced Financial Assistance: Expand the scope of interest subvention schemes and provide easier access to export credit, particularly for SMEs. Consider a temporary export refinance facility.

Diversification of Export Markets: Aggressively promote exports to non-traditional markets in Africa, Latin America, and Southeast Asia. Government-sponsored trade missions and marketing campaigns are essential.

Strengthening Export Intelligence: Establish a robust export intelligence system to provide exporters with real-time information on tariff changes,trade regulations,and market trends.

Addressing Logistics Bottlenecks: Invest in improving port efficiency, reducing logistics costs, and streamlining customs procedures. Digitalization of trade processes is key.

Advocacy at International Forums: India needs to actively engage with international organizations like the WTO to advocate for a fair and rules-based global trading system.

R&D and Value Addition: Incentivize research and development to promote value-added exports and reduce reliance on basic commodities.

Navigating tariff Barriers: Practical Tips for Indian Exporters

Indian exporters can proactively mitigate the impact of tariffs through several strategies:

Product diversification: Expand product offerings to reduce dependence on tariff-affected items.

Market Research: Thoroughly research alternative markets with lower tariff barriers.

Cost Optimization: Identify and implement cost-saving measures throughout the supply chain.

Hedging Strategies: Utilize currency hedging to mitigate exchange rate fluctuations.

FTA Utilization: Maximize the benefits of existing FTAs by understanding rules of origin and compliance requirements.

Supply Chain Resilience: Build resilient supply chains to minimize disruptions.

Focus on Niche Markets: Identify and target niche markets with specialized product demands.

Case Study: Impact on Indian Shrimp Exports

The imposition of anti-dumping duties by the U.S. on Indian shrimp imports in 2023 serves as a stark example. While India remains a major shrimp exporter, the duties led to a significant price increase for U.S. consumers and a decline in export volumes. indian exporters were forced to explore alternative markets like Europe and Japan, but this required significant investment in marketing and compliance. This highlights the need for proactive market diversification and a strong focus on quality and traceability.

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