Trump's 25% tariffs: Government starts talks, industry seeks sops to offset hit

NEW DELHI: Within hours of President Trump announcing a 25% tariff on Indian exports to the US, the commerce department sought to comfort exporters while also nudging them to explore other markets. Exporters responded with suggestions that govt offer them assistance to overcome the adverse impact of US actions.

During consultations led by Rajesh Agarwal, special secretary in the commerce department, exporters suggested govt immediately come up with measures that would also boost sentiment.

"There is low-hanging fruit govt can address immediately," said a source in an export promotion council.

A senior govt official told TOI the commerce department was also seeking to speed up reforms for special economic zones, which would help exporters as well as boost capacity utilisation by making it easier to sell in the domestic tariff area (Indian territory outside SEZs).

One of the recommendations from exporters was to immediately start the export promotion mission, announced in the Budget but yet to become operational. In fact, during a meeting with commerce & industry minister Piyush Goyal, some of the elements, including marketing support and assistance to deal with trade actions, were also discussed. Although the outlay is a little over Rs 4,000 crore for the current financial year, the department is hopeful of the allocation being increased.

While only a handful of industry bodies have sent their inputs so far, interest subsidies are something several executives said were required to help exporters tide over the crisis as it would hurt orders in the short term and might create some cash flow issues as well.

"There is also a need to process duty drawback claims and GST refunds for exporters faster to ensure adequate liquidity," said another executive with an export promotion body.

While exporters had queries on the "penalty" proposed by Trump, govt officials said they were awaiting clarity on the issue.

Businesses have suggested an early bilateral trade agreement with the US will reduce disruption in the market, and are hoping for positive news during the next round of talks from Aug 25.

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