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Key Points

The Commerce Ministry acknowledges that new US tariffs will temporarily hurt Indian exports in key sectors. Industry is experiencing liquidity constraints due to slower orders and payment delays. The government is accelerating its Export Promotion Mission to provide immediate support to affected exporters. Despite short-term challenges, officials expect minimal long-term impact on India's overall trade and GDP.

Key Points: US 50% Tariffs Hit Indian Exports as Govt Fast-Tracks Support

  • US 50% tariffs to impact textiles, chemicals and machinery exports short-term
  • Industry facing liquidity crunch from slowing orders and delayed payments
  • Government fast-tracking Export Promotion Mission rollout for support
  • Ministry sees minimal long-term GDP impact from tariff measures
3 min read

US tariffs to impact Indian exports in short term; Govt fast-tracking export promotion measures: Commerce Ministry

India's Commerce Ministry says US tariffs will impact textiles, chemicals & machinery exports short-term but limited long-term effect. Govt accelerating export promotion measures.

"It's a wake-up call for industry and governments to see how we can diversify our exports - Commerce Ministry Official"

New Delhi, August 28

The Commerce Ministry on Thursday said the recent imposition of 50 per cent tariffs by the United States will have a short-term impact on India's exports, particularly in sectors such as textiles, chemicals, and machinery. However, it asserted that the long-term effect on overall trade and GDP will remain limited.

"It is understood that 50 per cent tariffs are going to impact trade, especially the sectors on which tariffs are there. They will suffer some trade loss in the US. There will be an impact on textiles, chemicals, machinery, etc. for the short run, but it will not be a very long-term loss," a senior Commerce Ministry official told ANI.

The official acknowledged that industry bodies have expressed concern over liquidity constraints due to slowing orders and delayed payment cycles. "In the short run, their orders will slow down. The money that they have to get back from their exports will also slow down. So they will face some liquidity crunch and will be under financial strain to run their operations," the official said.

According to the official, several industry players have urged the government to consider measures similar to those introduced during the COVID-19 crisis to address immediate financial challenges. "There is a very positive work going on to see how best we can implement their suggestions. The government is seized of the issue and their concerns are on our agenda," the official added.

The government is prioritising an accelerated rollout of the Export Promotion Mission (EPM) to cushion the impact of the tariff hike. "Fast rollout of EPM will fill this void and give some impetus and support to the industry. That is something we are focusing on," the official added.

Highlighting the need for resilient supply chains, the official termed the tariff situation as a "wake-up call" for all stakeholders. "Every little challenge or crisis is a new opportunity. It's a wake-up call for industry and governments to see how we can diversify our exports, both in terms of the products we offer and the geographies where we sell," the official said.

The government is also working to boost exports through e-commerce platforms, which it believes can help Indian exporters tap global markets faster. "Through our embassies and market access initiatives, we will support industry delegations to create more B2B connections and open up new market opportunities," the official added.

On the Bilateral Trade Agreement (BTA) with the US, the official clarified that formal negotiations are not underway at present. "Negotiations and retaliation cannot go hand in hand. Talks have not been taken off the table, but right now we are not discussing the next formal round," said the official, adding that any trade agreement would need to address the additional 25 per cent tariffs first.

Despite the tariff hike, the Commerce Ministry expects the impact on India's GDP to remain minimal.

- ANI

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Reader Comments

P
Priya S
Good that the government is taking proactive steps. The Export Promotion Mission rollout needs to be fast-tracked. We can't afford to lose market share to Vietnam and Bangladesh in textiles.
M
Michael C
As someone working in export finance, I see this as a wake-up call indeed. Indian exporters need to diversify beyond the US market. The EU and African markets have huge potential that we haven't tapped properly.
A
Ananya R
The e-commerce push is a smart move! Many small businesses can benefit from platforms like Amazon Global Selling. Hope the government provides proper training and support for digital exports 💻
S
Sarah B
While I appreciate the government's response, I wish they had anticipated this better. Trade tensions with the US were building up for months. Reactive measures are good, but proactive planning would have been better.
V
Vikram M
The chemical industry in Gujarat is going to face the heat. We need immediate working capital support and faster tax refunds. Hope the commerce ministry walks the talk on support measures.

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