Trump tariff-hit exporters seek govt sops, eye survival plans

The new regime marks a sharp jump from the current 2.1%–13.9% tariff range to 51.3%–63.9%, directly impacting sectors that account for 20% of India’s $86 billion in annual exports to the world’s largest economy. 

Exporters raise alarm

Exporters and industry bodies warn the tariffs will render businesses unviable, with diamond and jewellery leaders calling the move “devastating.” The Gems and & Jewellery Export Promotion Council (GJEPC) has sought urgent relief, including part tariff reimbursement, while apparel exporters are rushing to ship goods before the deadline in hopes of avoiding some immediate losses.

“There is no way Indian exporters can afford an import tariff of 50% on diamonds and jewellery. The sector is already facing headwinds of poor demand since the last three years. And if anything, the higher tariffs will result in untold damage to the sector,” says Mavjibhai Patel, co-founder of Kiran Gems, one of largest exporters of diamonds and jewellery to the US.

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The GJEPC, set up by the commerce ministry, has sought short term measures by the government to lower the blow caused by the imposition of additional tariffs on US exports. “Business will be zero… nobody can do business with a 50% tariff. A blanket tariff of this magnitude is severely devastating for the sector,” Kirit Bhansali, chairman of the council, said in an interview to Mint on Thursday.

GJEPC has proposed introduction of a duty drawback scheme, which would reimburse 25-50% of the new tariffs imposed on gems and jewellery exports to the US from August to December. This aims to offset the impact of the new tariff, mitigating financial stress on exporters, and help India maintain its market share.

To promote market diversification and reduce reliance on the US market, the GJEPC has requested financial assistance under the MAI Scheme to support initiatives to enter new markets. This includes backing for the upcoming SAJEX jewellery exhibition in Jeddah and the setting up of an India Jewellery Exposition Centre in Saudi Arabia. It said these measures will help the industry explore new opportunities and broaden its customer base.

Racing against deadline

In the textile and apparel sector, the Apparel Export Promotion Council’s vice chairman A. Shaktivel has exhorted exporters to push out as many orders as possible before 27 August, the last date when the old tariffs will hold. He has also advised exporters to bear any additional cost and send the goods by air as a precautionary measure.

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“In our sector, we are confident that the Indian government will sign a trade agreement with the US in the next three-four weeks, but we are taking some interim measures to mitigate short-term losses,” says Shaktivel. “The point remains that the industry will not be remunerative for exporters if the new tariffs are implemented.”

Investors seem to have already read the tea leaves. In the last two days, shares of companies like Welspun Living, Trident and Gokaldas Exports, which export an assortment of towels, bed linen and apparels to US retailers have taken a hit. Shares of Gokaldas Exports fell from ₹820 on 4 August to ₹722 on 7 August.

Shaktivel does not expect any government incentives for exporters, but he feels that if the tariffs do come into force, the exporters will have to have a dialogue with the customers to share any additional cost. “It will be impossible for any exporter to reduce their costs to accommodate the increased tariffs.”

Among other measures being advised is to go slow on production for orders that will be delivered beyond 27 August. That will not be an easy call, as customers usually impose penalties on delayed shipments and local firms would have to bear the cost of inventory for a longer time. “There is no denying that exporters will have to absorb some costs in the short-run,” says Shaktivel.

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