Exporters reel under us tariffs as relief stalls, government weighs reforms over handouts

Indian exporters are struggling to cope with the double blow of US tariffs, weeks after Washington imposed steep reciprocal and penal duties on Indian goods. Despite mounting pressure from industry bodies and repeated pleas for relief, the Centre has so far resisted announcing a bailout, preferring to focus on structural reforms rather than immediate handouts.

Two of the government’s key economic ministries — finance and commerce — have held multiple rounds of talks with exporters across affected sectors, but sources say deliberations on relief measures have made little headway. Officials point to the challenge of designing support packages without clarity on the duration of US tariffs.

“The government did provide free foodgrains during Covid, but even then the focus was on reforms and long-term resilience. A similar approach is being discussed now, with an eye on medium- to long-term competitiveness,” a senior official was quoted as saying.

Exporters hit cash-flow crunch

Exporters warn that the lack of timely intervention could erode their hard-won share in the US market, India’s single largest export destination. With importers in the US already shifting orders to Vietnam, Indonesia and Bangladesh, exporters say the cushion is thinning fast.

“The pain is most acute among units with full exposure to the US market. Several SEZ exporters are even seeking denotification to exit. Unless relief is extended soon, we risk long-term damage,” said a senior government official.

Industry associations have suggested measures such as extending export obligation periods, offering liquidity support through working capital loans, allowing SEZ units to sell more freely in the domestic market, and reviving schemes like interest equalisation and remission of duties. But differences between the Finance and Commerce ministries over modalities have stalled progress.

High-level diplomacy, but slow negotiations

US tariffs — 25% duties imposed in July under the International Emergency Economic Powers Act, followed by another 25% levy in August citing India’s Russian oil imports—now affect an estimated 55% of India’s $87 billion exports to the US. While trade talks between New Delhi and Washington have resumed, officials admit resolution may hinge on sensitive issues such as Russian crude.

Commerce Minister Piyush Goyal and Finance Minister Nirmala Sitharaman have both met industry delegations in recent weeks, offering assurances but no immediate financial package. “Time is of the essence here. Certain measures used during Covid can be replicated quickly to bring relief,” an official said.

Push for structural reforms

Alongside relief deliberations, the government is exploring structural reforms — easing quality control norms in labour-intensive sectors, boosting e-commerce exports, fast-tracking customs clearances and scaling up export promotion budgets. Think tanks like the Global Trade Research Initiative argue that predictable, broad-based support would help Indian exporters withstand global shocks.

For now, exporters are left grappling with rising costs and uncertainty. “US tariffs are not just about losing orders today,” said Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council. “They threaten jobs and competitiveness for years to come. Until trade talks deliver results, we urgently need support to survive.”