eepc-india-seeks-govt-support-against-tariff-on-engineering-goods

The Engineering Export Promotion Council (EEPC), India, has asked for urgent government intervention in absorbing at least 15 per cent of the US tariffs on engineering goods imported to the US.

In a meeting with the Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, the Chairman of EEPC India, Pankaj Chadha, said the engineering goods sector was under immense pressure due to the imposition of high tariffs by the US, especially since nearly 45 per cent of the country’s total engineering exports will be hit.

“India’s engineering exports to the USA average around USD 20 billion, which accounts for nearly 45 per cent of the country’s total engineering exports exposed to US tariffs. This underscores the vulnerability of our sector and the urgent need for government support,” Chadha said in a statement.

For the sector to remain competitive, the EEPC chairman has offered some suggestions to the Centre, including the reinstatement of the Interest Equalisation Scheme (IES), especially for the MSMEs and SME manufacturing units so that they can afford bank finance. 

 

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Highlighting the difficulties faced by the exporters in accessing collateral-free loans, Chadha said high collateral requirements by banks are a huge hindrance to smaller export units.

“MSMEs continue to face problems when seeking finance from banks and financial institutions because of high collateral requirements. The credit rating system used by banks further hurts them, leading to higher interest rates and collateral demands,” he stated, adding that rating agencies should not factor in the US tariff exposure while assessing exporters’ creditworthiness, at least for this year.

The industry body has also said Indian exporters face a duty disadvantage of nearly 30 per cent compared to competing nations.

“While the industry can absorb 15 per cent of the tariff, we seek government support for the remaining 15 per cent either through scrips or by allowing exchange conversion at the REER rate of exchange,” it added.