Govt May Absorb Some of Tariff Heat for US Exports

Finance, commerce ministries discuss plan as tariffs threaten to hurt exporters

- Dhirendra Kumar & Gireesh Chandra Prasad

The Centre may partially compensate exporters for their US shipments under Donald Trump's punitive tariff regime, three people aware of the discussions said.

With the dawn of steep tariffs, Indian exporters are compelled to reduce prices to stay competitive, which makes a direct hit on their business. The government is now looking to bear 10-15% of the price cuts to help exporters stay in the game, the people cited above said on the condition of anonymity.

The relief, limited to US-bound consignments, will remain in force until the issue is settled through trade talks, which have been delayed but remain under discussion.

The proposal is being coordinated between the ministries of finance and commerce to address the mounting pressure on manufacturers and exporters, particularly those in labour-intensive sectors, which are struggling to execute confirmed orders.

The Centre may support some of the affected sectors with 10-15% for the price sacrifice they make to keep their US business going, one of the two people cited above said, though the sectors had asked for even higher support. This aid will help exporters continue to execute their orders and keep the manufacturing process going, the person added.

Given that US importers must pay tariffs on goods imported from India, they are asking their Indian suppliers to reduce prices to compensate for the tariff burden, exporters have said. However, doing so would be an additional burden to the Indian exporter.