Importers plead for aid and loans at reduced costs to manage Trump's import taxes
In a significant development, the US has announced a 25% duty on various Indian exports, effective from August 7. This duty, over and above the existing standard import duty in the US, has sent shockwaves through the Indian exporting community.
The sectors most affected by this high tax include textiles/clothing, gems and jewellery, shrimp, leather and footwear, chemicals, and electrical and mechanical machinery, collectively amounting to billions of dollars in annual exports. US buyers have started cancelling orders or holding back orders for sectors like apparel and shrimp, which could impact India's exports to the US in the coming months.
The US accounts for over 30% of India's leather and apparel exports, making it a crucial market for these sectors. The new duty could lead to a significant dip in shipments, potentially resulting in job losses. Sudhir Sekhri, Chairman of the Apparel Export Promotion Council (AEPC), has urged the government for immediate intervention to offset this significant setback to exporters.
Arvind Goenka, a plastic exporter from the Delhi NCR region, fears stiff competition from countries like Vietnam, Thailand, and South Korea due to lower tariffs in those countries. These countries may encroach on India's share, which currently amounts to $2.2 billion annually.
The Indian government is being sought by exporters from various sectors, including food, marine, textiles, for financial assistance and affordable credit due to the 25% Trump tariff. However, no concrete information is found on proposed financial aid or incentives such as subsidies, export rebates, credit facilities, or tariff compensations explicitly aimed at Indian exporters to counteract the 25% tariff increase.
In response, the Commerce and Industry Minister, Piyush Goyal, has suggested that the exporting community send their suggestions in writing. The minister has also hinted at the possibility of plans similar to the production-linked incentive (PLI) scheme being considered to support the affected sectors.
The impact on India's polished diamond exports and the planned meeting between the Textile Ministry and industry players remain unclear. The government may find it difficult to extend fiscal incentives due to the impact on the economy.
As the deadline for the implementation of the duty approaches, the Indian exporting community is bracing for a challenging period ahead. Exporters may have to sell below cost to keep their factories running and avoid mass layoffs. Rafeeq Ahmed, Chairman of India's leading footwear exporter, Farida Group, has urged the government to help the industry before a trade pact is finalised between India and the US.
This development comes at a time when India's goods exports in FY 2026 may decrease by 30% from $86.5 billion in the last fiscal to $60.6 billion in 2025-26, according to GTRI. The article was published on August 3, 2025.
[1] Sources: https://www.livemint.com/news/india/us-to-impose-25-duty-on-indian-exports-from-august-7-11659980671631.htmlhttps://www.thehindubusinessline.com/economy/us-imposes-25-duty-on-indian-exports-of-certain-goods/article39064702.ece
- The announced 25% duty on various Indian exports by the US, set to take effect from August 7, has sparked concern in the business sector, particularly in industries like textiles/clothing, gems and jewellery, shrimp, leather and footwear, chemicals, and electrical and mechanical machinery.
- US buyers are reportedly cancelling orders or delaying them for sectors such as apparel and shrimp, raising concerns about the potential impact on India's exports to the US in the coming months.
- The US, with its significant 30% share in India's leather and apparel exports, is a crucial market for these sectors. The new duty may result in a significant drop in shipments, potentially leading to job losses.
- Exporters from various sectors, including food, marine, textiles, are requesting financial assistance and affordable credit from the Indian government due to the 25% increase in the Trump tariff. However, no concrete information has been provided regarding proposed financial aid or incentives.
- The Commerce and Industry Minister, Piyush Goyal, has asked the exporting community to submit their suggestions in writing and hinted at the possibility of plans similar to the production-linked incentive (PLI) scheme being considered to support the affected sectors.
- As India's polished diamond exports and the planned meeting between the Textile Ministry and industry players remain uncertain, the government may face challenges in extending fiscal incentives due to the potential impact on the economy. Exporters may need to sell below cost to keep their factories running and avoid mass layoffs.
