Strategic action and support from the government urged in the face of US tariffs

The Federation of Indian Export Organisations (FIEO) has expressed grave concern over the US government’s imposition of an additional 25% tariff on Indian-origin goods - raising total duties on many export categories up to 50%, effective from August 27, 2025. The move will severely disrupt the flow of Indian goods to its largest export market. FIEO President, Mr S. C. Ralhan, described the development as a setback, adding that it could severely impact India’s exports to the US, with approximately 55% of India’s US-bound shipments (worth USD 47-48 billion) now exposed to pricing disadvantages of 30-35%, rendering them uncompetitive in comparison to China, Vietnam, Cambodia, Philippines and other Southeast and South Asian countries. 

Textiles and apparel manufacturers in Tirupur, Noida and Surat have halted production amid worsening cost competitiveness. The sector is losing ground to lower‑cost rivals from Vietnam and Bangladesh. For seafood, especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports, the tariff increase risks stockpile losses, disrupted supply chains and farmer distress.  
Other labour-intensive sectors of exports like leather, ceramics, chemicals, handicrafts, carpets etc. too face a sharp erosion in competitiveness, particularly against European, South East and Mexican producers, said Mr Ralhan. Delays, order cancellations and negated cost advantages loom large on these sectors. 

 

Call for government support 

 

Looking at the emerging scenario, the FIEO Chief urged immediate government support, which includes push for interest subvention schemes and export credit support to sustain working capital and liquidity. To further support this, he said there was need for low cost of credit and easy availability of credit with emphasis on MSMEs, with support from banks and financial institutions. Special direction must be given in this regard both by the government and the Reserve Bank of India.

Mr Ralhan also called for a moratorium on payment of principal and interest for loans up to a period of 1 year. Additionally, automatic enhancement of the existing limit by 30% along with collateral free lending on ECLGS lines may also be pushed as these will help in addressing the stress on these companies without much burden on the exchequer.  

 

Besides, expanding PLI schemes, enhancing infrastructure, and investing in cold chain/storage assets to strengthen competitiveness, and aggressive market diversification through accelerated trade agreements (FTAs) with the EU, Oman, Chile, Peru, GCC, Africa, and other Latin American countries with a provision for early harvest for labour-intensive sectors should be prioritised. 

 

However, leveraging the negotiating window for urgent diplomatic engagement with the US still remains the key. 

Yet another approach could be promotion of Brand India & Innovation through enhanced global branding, investing in quality certifications, and embedding innovation in export strategy to make Indian goods more attractive globally.

FIEO appealed for swift, coordinated action among exporters, industry bodies and government agencies to protect livelihoods, reinforce global trade links and navigate this turbulent phase. The steps taken now will determine how effectively India withstands external shocks and reasserts its presence in the global export landscape, emphasised a release.

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