PMO will hold a high-level meeting on Tuesday as India braces for a sharp trade shock from the US.
The PMO will hold a high-level meeting on Tuesday as India braces for a sharp trade shock from the United States. Starting Wednesday, Indian goods entering the US market will face a 50% tariff. The US doubled the existing 25% duty, and the move has put heavy pressure on exporters already battling weak demand.
The session, likely to be chaired by the Principal Secretary to the PM, will examine how India can shield its exporters. Officials said the focus will be on small firms and export-oriented sectors.
Exporters said the timing could not be worse. Indian companies were counting on strong festive season orders from the US, especially for textiles, leather, and gift items. But the tariff shock has made buyers hesitant. Firms fear cancellations and delayed payments.
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One exporter explained that the earlier 25% duty had already eaten into profits. “Margins are gone. At 50%, many of us will stop getting orders,” he said.
The government has been in talks with export promotion councils to understand the fallout. Officials said protecting small and medium enterprises (SMEs) is the top priority. These firms drive most of India’s labour-intensive exports but lack financial cushion to absorb global shocks.
An official noted that “micro-firms have indicated sector-specific credit lines with collateral support are helpful.” The idea of cluster-based working capital funds is also under active discussion.
Exporters had requested an Emergency Credit Line Guarantee Scheme (ECLGS). The scheme offers collateral-free working capital backed by the government. But officials believe targeted, sector-specific support will be more effective than broad subsidies.
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Policy advisers argue that a one-size-fits-all package may not work. Instead, industries like textiles, engineering goods, and specialty chemicals could get separate support.
The meeting also comes at a sensitive moment for India–US relations. While New Delhi has tried to position itself as a reliable trade partner, Washington’s tariff hike shows that political priorities in the US are taking precedence.
The government fears the 50% duty could not only squeeze exporters but also disrupt supply chains and weaken India’s competitiveness in the American market.
Tuesday’s PMO meeting will finalise India’s first response. But officials admit the damage may be hard to contain if festive season orders decline sharply.
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The bigger challenge, exporters warn, is that once buyers shift to other countries, winning them back will be tough. India now faces a test, whether it can shield its vulnerable exporters while keeping trade ties with Washington on track.
