With Trump imposing a 25 per cent reciprocal tariff and warning of an additional penalty linked to India’s oil trade with Russia, exports to the US during April–July expanded seven times faster than overall growth.
In April, exporters rushed to beat reciprocal tariffs, and a similar frontloading is now evident ahead of the 27 August deadline for a further 25 per cent levy. As a result, shipments to the US rose 21 per cent to $33.5 billion during April–July, compared with overall exports rising
With the US now accounting for 22 per cent of India’s shipments, exporters face higher vulnerability to a potential 50 per cent duty. Still, the surge in exports has given some companies the room to offer discounts if required.
“We have spent the last week talking to buyers and in case of old buyers we are looking at some additional discount to retain the business even if it means that we have to pay out of our pockets for sometime.
“Although official negotiations with the US (scheduled to start Aug 25) have been postponed, we expect some breakthrough in the forthcoming weeks,” said Sudhir Sekhri, chairman of the Apparel Export Promotion Council (AEPC), as quoted by TOI.
Exporters said they had managed to absorb the impact of the first 25 per cent duty already in place, often by sharing costs with buyers and fast-tracking consignments before deadlines. For the next round, some contracts now include clauses stating that discounts will not apply if the additional
Industry leaders, however, warn that a 50 per cent tariff would be unsustainable. “We operate on a very thin margin of 5-7%, where is the question of offering steep discounts to offset the impact of 25% additional duty? We can sacrifice our profits but can’t sustain the business with losses,” said Rajendra Kumar Jalan, chairman of the Council for Leather Exports, adding that ongoing US-Russia talks have offered a ray of hope that the penalty may not be enforced.
