US Tariff Threats Loom Over Indian Exports: Government Plans Incentives

Indian exports are facing headwinds as global trade uncertainties and potential US tariff hikes create concerns among exporters. According to industry sources, India's export growth in February 2025 is likely to be impacted due to external pressures, continuing the declining trend seen in recent months.

In response, the Indian government is actively considering incentives to support exporters and may announce new measures within a month.

Government Mulls Incentives for Exporters Amid Uncertainty

• As per reliable sources, the government is assessing potential incentive schemes for exporters.

• The Export Promotion Mission, introduced in the Union Budget 2024-25, still has room for adjustments as it is yet to be officially notified.

• With rising trade challenges, policymakers are expected to finalize support measures soon to boost export competitiveness.

Key Meeting Scheduled Between Exporters and Government

• Commerce and Industry Minister Piyush Goyal is set to meet with exporters and Export Promotion Councils (EPCs) on March 13, 2025.

• Federation of Indian Export Organisations (FIEO) President Ashwani Kumar hinted that Minister Goyal may revisit the US to hold further discussions on trade agreements and tariff-related concerns.

Bilateral Trade Agreement (BTA) Could Bring Relief

• Ajay Sahai, Director General of FIEO, expressed optimism about a bilateral trade agreement (BTA) with the US by the fall of 2025.

• Indian exporters aim to negotiate for better trade concessions and preferential tariffs to enhance their access to the American market.

Opportunities and Challenges for Indian Exporters

• While retaliatory tariffs on other countries could provide an opportunity for Indian exporters to capture a larger market share, the competition in non-US markets is expected to intensify as affected nations redirect their exports elsewhere.

• Despite these uncertainties, industry estimates indicate that Indian exporters could gain an additional $25 billion in export opportunities, assuming that India avoids any additional tariffs under the potential BTA with the US.

Labour-Intensive Sectors in Focus

• The Indian government and exporters are emphasizing key labour-intensive sectors, including:

  • Apparel and textiles

  • Footwear

  • Gems and jewellery

  • Pharmaceuticals

  • Automobiles and auto components

• These industries not only contribute significantly to foreign exchange earnings but also play a crucial role in employment generation within the domestic economy.

Conclusion

As India navigates a complex global trade landscape, the looming threat of US tariffs and broader economic uncertainty pose significant challenges for exporters. The Indian government is proactively considering incentives to cushion the impact, with discussions underway to finalize supportive measures. The upcoming meeting between Commerce Minister Piyush Goyal and export bodies will be crucial in shaping these strategies.

A potential bilateral trade agreement (BTA) with the US by late 2025 offers a glimmer of hope, as it could secure preferential tariffs and trade concessions, bolstering India’s export prospects. Meanwhile, sectors such as textiles, footwear, pharmaceuticals, and automobiles remain pivotal in driving exports and employment.

With an estimated $25 billion in additional export opportunities on the horizon, India must strategically position itself in global markets. Effective trade negotiations and targeted incentives will be key to sustaining export growth and ensuring resilience against external economic shifts.