FIEO warns over US tariff hike, seeks urgent government intervention

August 26, 2025

Ludhiana, Punjab: The Federation of Indian Export Organisations (FIEO) has voiced strong concern over the US government’s decision to impose an additional 25% tariff on Indian-origin goods from August 27, pushing total duties on many export categories up to 50%.

This measure threatens to significantly disrupt the movement of Indian goods to its largest export market.

FIEO President S C Ralhan termed the development a major setback, noting that around 55% of India’s shipments to the US — valued at USD 47–48 billion — will now face pricing disadvantages of 30–35%, making them less competitive compared to exports from China, Vietnam, Cambodia, the Philippines, and other regional rivals.

Sectoral Impact: Textiles, Seafood, and Labour-Intensive Industries Hit

Textile and apparel units in Tirupur, Noida, and Surat have already scaled down or halted production due to shrinking cost competitiveness, while Vietnam and Bangladesh continue to gain market share.

The seafood sector, particularly shrimp exports, faces a major blow as the US accounts for nearly 40% of Indian seafood exports. The tariff hike could lead to stockpile losses, disrupted supply chains, and distress among farmers.

Other labour-intensive sectors, including leather, ceramics, chemicals, handicrafts, and carpets, risk losing their competitive edge against producers in Europe, Southeast Asia, and Mexico, with rising risks of order cancellations and loss of market share.

Call for Urgent Government Support

FIEO has urged immediate government intervention to safeguard exporters. Recommended measures include expanding interest subvention schemes, providing export credit support, ensuring low-cost and easily accessible credit — especially for MSMEs — and directing banks and financial institutions to extend special support.

Proposals also include a one-year moratorium on loan repayments, automatic 30% enhancement of existing credit limits, and collateral-free lending on lines similar to the Emergency Credit Line Guarantee Scheme (ECLGS) to ease financial stress without heavily burdening the exchequer.

Long-Term Strategies and Diplomatic Push

For sustained competitiveness, FIEO suggests expanding the Production Linked Incentive (PLI) scheme, enhancing infrastructure, investing in cold-chain and storage facilities, and accelerating market diversification through trade agreements with the EU, Oman, Chile, Peru, GCC nations, Africa, and Latin America, with early-harvest provisions for labour-intensive sectors.

The organisation also stresses the need for urgent diplomatic engagement with the US, along with global branding initiatives under “Brand India,” investment in quality certifications, and embedding innovation into export strategies to make Indian goods more attractive internationally.

FIEO calls for swift, coordinated action among exporters, industry bodies, and government agencies to protect livelihoods and reinforce India’s standing in global trade.