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The US imposed 50 percent tariff on India is expected to affect around USD49 billion worth of Indian exports. Sectors like textiles, leather, gems, and jewellery are among the worst-hit sectors, however, the Indian government is reportedly working on a comprehensive strategy to mitigate this impact. The Modi-led government is preparing to take steps to help exporters deal with the liquidity crisis triggered by the 50 percent tariff on Indian goods.
 "general Trump tariff blow: How India plans to tackle liquidity crisis, cushion hit on exporters")
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The US imposed 50 percent tariff on India is expected to affect around USD49 billion worth of Indian exports. Sectors like textiles, leather, gems, and jewellery are among the worst-hit sectors, however, the Indian government is reportedly working on a comprehensive strategy to mitigate this impact. The Modi-led government is preparing to take steps to help exporters deal with the liquidity crisis triggered by the 50 percent tariff on Indian goods.
What are govt plans to mitigate US tariff impact?
The Indian exporters are facing delayed payments, cancelled orders and working capital stress, leading to a liquidity crisis. To counter it, the government is preparing for Covid-style liquidity relief measures. In addition, it has sought medium and long-term strategies for market diversification and global supply chain integration as per two officials according to a Hindustan Times report.
According to reports, the government is considering new schemes inspired from its pandemic response(2020-2021 period) to address the magnitude of the crisis. It is contemplating a phased approach with short, medium and long term strategies to aid immediate liquidity relief, and steps to keep intact employment in vulnerable sectors and building supply chain through structural reforms.
How govt plans to create new market access to exporters?
Besides liquidity support, the government has been planning to utilise existing trade agreements to create new market access opportunities for exporters. They are considering providing market access initiatives, branding support, export compliance assistance, and capacity building for exporters to ease tariff impact.
Most recently, the government also announced GST reforms, with an aim to rationalise GST rates to reduce tax burdens and boost domestic consumption. According to an EY report, the impact of Trump’s 50% tariff could be limited to 0.1% of GDP.
While government officials are contemplating on a strategy to mitigate the effects, final details of the government response and key schemes will be announced after consultations with industry bodies and export promotion councils.
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