New Delhi: The government is working on certain support measures for exporters in sectors like textiles and chemicals to insulate them from the impact of the Trump tariff, an official said on Monday.
US President Donald Trump has announced an additional 25 per cent import duty on Indian goods entering America from August 7.
The official said that the commerce ministry has held meetings with several export sectors, including steel, food processing, engineering, marine, and agriculture, to understand issues they may face due to high tariffs.
Indian exporters from various sectors, including food, marine, and textiles, have sought financial assistance and affordable credit from the government to cope with the 25 per cent Trump tariff.
Exporters are requesting the government to extend fiscal incentives such as interest subsidy and extension of RoDTEP scheme (Remission of Duties and Taxes on Exported Products), RoSCTL (Rebate of State and Central Taxes and Levies), timely payment of dues, and a direct shipping line to the US.
The ministry is considering these demands, the official said, adding that the ministry will also engage with states to support the exporters.
The sectors, which would be impacted by the high tax of the US, include textiles/ clothing, gems and jewellery, shrimp, leather and footwear, chemicals, and electrical and mechanical machinery.
Sectors such as certain textile items, chemicals and shrimp are at a more disadvantageous position because India’s competitor nations, including Bangladesh (20 per cent), Vietnam (20 per cent) and Thailand (19 per cent), have lower duties, an exporter said.
Another exporter said that the US is a major export destination for Indian shrimp. “Now the exporters should explore new markets such as the UK, China and Japan,” the exporter added. Electronics, including smartphone exports, are recording healthy growth in the US despite uncertainties.
While the government plans to cushion the impact of the tariffs on the most vulnerable products, talks on the Bilateral Trade Agreement (BTA) are ongoing, with a target to conclude the first round by October-November, which could help restore tariffs to normal levels. For the sixth round of talks, the US team is visiting India at the end of the month. The five day negotiations will start from August 25.
The duties announced by the US President will be applicable on shipments going out after August 7. Cargoes leaving the ports before the August 7 deadline and received in American warehouses before October 5 will be charged a baseline tariff of 10 per cent.
In a meeting on July 4 with Commerce and Industry Minister Piyush Goyal, leather exporters sought 5 per cent duty credit scrip and interest subvention to sustain in the global market.
An exporter said that labour cost in the US is about $25 per footwear, while India can deliver a pair in $15-20 and sports shoes at much lower costs ($5-10).
During January-June, India’s leather and footwear exports to the US rose to $598 million from $548 million in the same period last year.
Exporters have long demanded the revival of the Interest Equalisation Scheme (IES), which expired on December 31, 2024. The scheme provided a 3 per cent subsidy on pre- and post-shipment credit.
Exporters now want this support increased to 5 per cent, as the scheme helped bring Indian exporters closer to parity with competitors operating in lower interest rate environments. Currently, interest rates in India range from 8 per cent to 12 per cent or more, depending on the borrower’s risk profile. In contrast, central bank rates in competing countries are significantly lower - 3.1 per cent in China, 3 per cent in Malaysia, 2 per cent in Thailand, and 4.5 per cent in Vietnam.
This year’s Union Budget announced an Export Promotion Mission (EPM), under which the IES is expected to be subsumed.
Work on framing the EPM is currently underway.
Exporters have also proposed increasing the rate of tax refund under the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Rebate of State and Central Taxes and Levies (RoSCTL) schemes.
The RoSCTL scheme benefits the apparel sector, which is the most vulnerable to the reciprocal tariffs. RoDTEP covers 10,500 products, with refund rates ranging from 0.3 per cent to 3.9 per cent. Previously, IES cost around Rs 2,500 crore annually. For FY26, the estimated outlay for RoDTEP is projected at Rs 18,233 crore.