The Prime Minister’s Office (PMO) is set to convene a high-level meeting on Tuesday to assess and formulate a response to the higher tariffs imposed by the United States on Indian exports. The session, which will likely be chaired by the Principal Secretary to the Prime Minister, comes as Indian goods entering the US market are about to face a 50 pc tariff beginning this Wednesday.
This is a result of Washington doubling its existing duties, which is expected to significantly increase cost pressures on Indian exporters. To fully assess the effects of the current 25 pc levy, the Ministry of Commerce and Industry has been actively consulting with a number of exporters and export promotion councils. According to feedback from these firms, the current tariff has already squeezed profit margins and diminished their competitiveness in the American market.
In response to this challenge, a range of policy options are under consideration. The focus is on implementing targeted support for specific industries, rather than broad, economy-wide measures. Exporters had initially requested the implementation of an Emergency Credit Line Guarantee Scheme (ECLGS), which would provide collateral-free working capital with government-backed risk coverage. However, officials believe that more sector-specific interventions may prove to be more effective.
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One official noted that micro-firms have indicated that sector-specific credit lines with collateral support are particularly helpful. The government is also actively considering the creation of cluster-based working capital funds to alleviate liquidity pressures on these businesses.
A central element of the government's strategy is to protect export-oriented units and small and medium-sized enterprises (SMEs), as they are considered the most vulnerable to external economic shocks. As exporters prepare for the upcoming tariff hike, the meeting is anticipated to finalise the specifics of India's official response.
There are worries that the increased 50 pc US tariff will further hurt Indian exporters' profit margins, upend current supply chains, and hurt the competitiveness of important industries. These industries include engineering goods, leather, textiles, and specialty chemicals.
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