Relief for exporters as US pauses tariffs

NEW DELHI: Indian exporters got a three-month reprieve from the 26% reciprocal tariff, but the good news comes with higher risk of desperate Chinese industry scrambling for alternative markets to dump their goods, amid Trump's 125% duty on China.

Indian policymakers were seeing it as a cautionary tale about the fluidity and volatility of the situation and justified their decision to engage with the US rather than being baited into a knee-jerk reaction.

Trump's 90-day pause suddenly makes sourcing of goods from India more attractive for companies that have a presence both in India and China, a move that could help spur economic activity in the country. It also gives time for govt to work out a strategy and engage with the US to speed up the proposed trade deal, although officials will have to get back to the drawing board.

The suspension for three months came hours after commerce and industry minister Piyush Goyal's meeting with exporters where he assured them that govt was "working with speed but not in undue haste to ensure the right outcome for the country".

"The deferral provides a critical window for diplomatic engagement and negotiations. It reflects a strategic pause aimed at avoiding immediate economic escalation, while allowing space for potential resolution. A huge relief for our exporters," said Ajay Sahai, DG, Fieo.

While elaborating on the monitoring mechanism, Goyal and his team of officials had also indicated that special economic zones will be put on alert to check their use for shipment by Chinese or other companies to the US. The minister had also asked his officers to set up a 24x7 helpline to address all concerns and assured industry that there will be constant monitoring of any surge in imports from any countries.

"The minister said that different countries are approaching the tariff imposition in a different manner. However, as far as India is concerned, there is a potential for increase in manufacturing, creation of additional jobs because it can attract big players in global supply chain as India has been able to establish itself as a trusted and reliable partner and with a predictable business friendly destination," a statement said. Goyal asked industry to come back with a specific list of non-tariff barriers that they face and complained that often companies do not revert.