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Exporters are trying to push out as many shipments as they can to the US before April 9 to avoid the 26 per cent reciprocal tariffs (a baseline duty of 10 per cent will still be applicable) and the customs department is fully co-operating
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LEAH MILLIS
With most exports from India to the US set to be temporarily on hold after April 9, when country-specific tariffs of 26 per cent kick in, Commerce & Industry Minister Piyush Goyal is likely to meet exporters this week. The meeting has been reportedly convened to brainstorm on how to negotiate with buyers who are revisiting orders and also deal with a possible disruption in payments and trade.
The Commerce Department is simultaneously considering industry requests to seek a tariff abeyance from the US till the India-US bilateral trade agreement (BTA) is signed. The Customs department has been simultaneously instructed to facilitate and prioritise exports to the US urgently before April 9, sources tracking the matter told businessline.
“Exporters are trying to push out as many shipments as they can to the US before April 9 to avoid the 26 per cent reciprocal tariffs (a baseline duty of 10 per cent will still be applicable) and the customs department is fully co-operating. Orders beyond April 9 will be put on hold as buyers are revisiting the orders. They want to fully examine the impact of the reciprocal duties, look at their liquidity situation and also alternative options. Nobody is sure about what to expect,” said Ajay Sahai, Director General, FIEO.
Trump announced a baseline reciprocal tariff of 10 per cent across products and countries (barring a few) from April 5 which will be replaced by country-specific tariffs from April 9. The US President said that the tariffs were to create a level playing field for US industry, push manufacturing and create jobs.
Ministry officials said that the Commerce Minister was in close touch with exporters and businesses to gauge the situation and map the way ahead. “The CIM is likely to hold a meeting with all export promotion councils on Wednesday to examine the existing situation in the US threadbare and chart a future course of action. There are expectations of tax cuts in the US which could help in maintaining demand,” an official said.
As Indian exporters are sitting with booked orders for the next three months estimated at around $25 billion, the country needs to first have a strategy for what to do with the orders in hand, said Pankaj Chadha, Chairperson, Engineering Export Promotion Council India. “We need to talk in one voice and find a strategy to ensure that the buyers do not pass on the burden of the higher tariffs on us. While the bigger exporters can sustain this for some time, the MSME exporters will be badly hit,” Chadha said, adding that export orders of engineering goods worth $6-7 billion were expected to be on hold.
The Apparel Export Promotion Council has asked the Commerce Department to urge the US to keep in abeyance or defer the reciprocal duties as a BTA was already being negotiated. It said that while reciprocal duties in competing countries such as Vietnam, China and Bangladesh were much higher and gave a competitive edge for Indian garments, there were concerns on a possible demand destruction because of inflation in the US.
The US was India’s largest trading partner and export destination in FY24 with exports worth $77.51 billion and imports worth $42.19 billion leading to a trade imbalance of over $35 billion.
Published on April 6, 2025
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