Trump’s China tariffs could unlock $25-billion export opportunity for India in US: exporters tell FM Sitharaman | Business News

by

A potential trade war between the United States (US) and China under the presidency of Donald Trump could create an additional $25 billion in export opportunities for Indian exporters to the US, the Federation of Indian Export Organizations (FIEO) said in a pre-trial on Thursday. Budget consultations with FM Nirmala Sitharaman and government officials at the Ministry of Finance.

India’s apex trade body emphasized the need for targeted measures to harness this opportunity. These include a marketing scheme with a corpus of Rs 750 crore spread over three years, continuation of the Interest Equalization Scheme (IES), and increased tax deduction from 200 to 250 per cent for research and development expenditure under Section 35(2AB) of the Income. -Tax Act.

FIEO identified the largest potential gain of $10 billion in the consumer electronics sector, where US firms are moving away from reliance on Chinese components due to safety and trade concerns. India, already a major player in mobile phone assembly, stands to gain significantly as global brands increasingly outsource production to the country, exporters said.

Other sectors with substantial opportunities include textiles and garments, toys and games, chemicals, footwear and furniture, each representing a $1 billion export potential. The automotive component sector could see an additional $1.5 billion worth of exports, exporters told the finance ministry.

The exporter’s body flags increased costs

FIEO also stressed that rising input and freight costs have increased the burden on exporters, who now require extended credit periods to meet buyers’ payment timelines. IES has been a key tool in mitigating these challenges. It comes amid ongoing attacks in the Red Sea region, forcing shipping lines worldwide to take longer routes.

“IES has provided a level playing field, enabling exporters to compete with global counterparts. Between 2015 and 2024, India’s exports under IES grew at a compound annual growth rate (CAGR) of 6.6 percent, while global merchandise trade growth was 4.4 percent. IES The expansion will boost exports in key sectors such as textiles, leather, chemicals and engineering goods,” FIEO said.

The IES is currently available only till December 31, 2024, and with an annual cap of Rs 50 lakh per importer-exporter code (IEC) holder for manufacturers in micro, small and medium enterprises (MSMEs), which is insufficient for many MSMEs, FIEO said. .

The Red Sea Barrier was flagged

The trade body also pointed out that China, India’s main rival, provides extensive subsidies and low-interest financing to its exporters, giving them an unfair advantage in the global market. In addition, regional competitors such as Vietnam, Thailand, and Indonesia benefit from favorable exchange rates and low financing costs. FIEO warned that without expanding IES, “India risks losing market share to these emerging players”.

Exporters also expressed concern about disruptions in the Red Sea region, noting that much of India’s international trade depends on foreign shipping lines. MSME exporters, in particular, remain vulnerable to high freight charges and supply chain disruptions.

“We remit more than $100 billion annually in shipping service charges, with shipping freight being a significant component. We welcome the Indian Shipping Corporation of India’s move to acquire more fleets but urge the government to invest more equity in it or encourage private sector participation. “Building a strong domestic shipping line will ensure greater flexibility in our business logistics,” FIEO said.

Why should you buy our membership?

You want to be the smartest in the room.

You want access to our award-winning journalism.

You don’t want to be confused and misinformed.

Choose your subscription package

Leave a Comment