New Delhi: The Reserve Bank of India (RBI) is likely to hold discussions with industry stakeholders to assess the sectoral impact of the 50% tariffs levied by the US. This consultation is expected to take place in September, ahead of the next monetary policy committee review.
The proposed meeting is significant as punitive tariffs on India have come into effect, potentially affecting 55% of $48-billion US-bound shipments annually. Labour-intensive sectors, such as textiles and apparel, gems and jewellery and marine products are expected to be among the worst hit by levies.
“A consultation is being planned in the wake of an uncertain international economic environment due to tariffs and trade policies,” said an official aware of the details. Record high tariffs would now expose US-bound merchandise mainstays to a pricing disadvantage of 30–35%, making India uncompetitive in comparison with producers of such goods from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries.
RBI officials and industry executives are also expected to discuss the India-UK Comprehensive Economic and Trade Agreement (CETA), said the official cited above. The central bank’s monetary policy committee is scheduled to meet next between September 29 and October 1.
An email query sent to RBI remained unanswered until the publication of this report.
RBI governor Sanjay Malhotra on Monday said the central bank is prepared to cushion the economy from the fallout of Washington’s move to impose 50% tariffs on India’s merchandise exports. He also underlined efforts to push trade in local currencies as part of the internationalisation of the rupee. “RBI has always been very proactive in whatever needs to be done for the betterment, advancement and growth of our country,” Malhotra had said at an industry event in Mumbai. He added that although 45% of merchandise exports are outside the tariff regime, some sectors such as gems and jewellery, textiles, shrimp cultivation and MSMEs could be hit.
REDUCED PRODUCTION
“This stakeholder consultation is important as the impact of the US tariffs is becoming visible on clusters such as Surat, Kanpur and Tiruppur, with fewer shifts at work,” said Anil Bhardwaj, Secretary General, Federation of Indian Micro Small & Medium Enterprises. “MSMEs need credit support to sustain working capital and liquidity. Else, the situation may worsen by Diwali.”
Exporters have sought a moratorium on interest payment on principal for a year, automatic bank limit enhancement by 30%, collateral free lending and interest equalisation for MSMEs to tide over the crisis. In textile, for instance, India exported $6-7 billion worth of apparel in FY25 to the US, and nearly 70% of the orders came in July-September. “However, this year, US market orders for spring and summer have almost reduced to a nought after America decided to slap 50% tariffs on Indian imports,” said Animesh Saxena, general secretary, Garment Exporters &Manufacturers Association.
MSMEs have now set their sights on the India-UK CETA, which is yet to be ratified. But once in effect, it will offer asizeable market to help offset the impact of punitive US tariffs.
The proposed meeting is significant as punitive tariffs on India have come into effect, potentially affecting 55% of $48-billion US-bound shipments annually. Labour-intensive sectors, such as textiles and apparel, gems and jewellery and marine products are expected to be among the worst hit by levies.
“A consultation is being planned in the wake of an uncertain international economic environment due to tariffs and trade policies,” said an official aware of the details. Record high tariffs would now expose US-bound merchandise mainstays to a pricing disadvantage of 30–35%, making India uncompetitive in comparison with producers of such goods from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries.
RBI officials and industry executives are also expected to discuss the India-UK Comprehensive Economic and Trade Agreement (CETA), said the official cited above. The central bank’s monetary policy committee is scheduled to meet next between September 29 and October 1.
An email query sent to RBI remained unanswered until the publication of this report.
RBI governor Sanjay Malhotra on Monday said the central bank is prepared to cushion the economy from the fallout of Washington’s move to impose 50% tariffs on India’s merchandise exports. He also underlined efforts to push trade in local currencies as part of the internationalisation of the rupee. “RBI has always been very proactive in whatever needs to be done for the betterment, advancement and growth of our country,” Malhotra had said at an industry event in Mumbai. He added that although 45% of merchandise exports are outside the tariff regime, some sectors such as gems and jewellery, textiles, shrimp cultivation and MSMEs could be hit.
REDUCED PRODUCTION
“This stakeholder consultation is important as the impact of the US tariffs is becoming visible on clusters such as Surat, Kanpur and Tiruppur, with fewer shifts at work,” said Anil Bhardwaj, Secretary General, Federation of Indian Micro Small & Medium Enterprises. “MSMEs need credit support to sustain working capital and liquidity. Else, the situation may worsen by Diwali.”
Exporters have sought a moratorium on interest payment on principal for a year, automatic bank limit enhancement by 30%, collateral free lending and interest equalisation for MSMEs to tide over the crisis. In textile, for instance, India exported $6-7 billion worth of apparel in FY25 to the US, and nearly 70% of the orders came in July-September. “However, this year, US market orders for spring and summer have almost reduced to a nought after America decided to slap 50% tariffs on Indian imports,” said Animesh Saxena, general secretary, Garment Exporters &Manufacturers Association.
MSMEs have now set their sights on the India-UK CETA, which is yet to be ratified. But once in effect, it will offer asizeable market to help offset the impact of punitive US tariffs.
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