Exporters urge govt to expedite deal with US

New Delhi: Exporters on Friday urged the government to fast-track negotiations on the proposed Bilateral Trade Agreement (BTA) with the US, as Washington's reciprocal tariffs have begun impacting orders. They also raised concerns over a potential surge in dumped Chinese goods.

Exporters sought government support to limit the tariff burden on them to 10% baseline duty, set to take effect on Saturday, saying it would be difficult for the exporters, importers and consumers to absorb the full 26% tariff. On its part, the government has said it will extend support to the affected sectors and identify possible opportunities. The government is also closely monitoring imports amid fears of dumping of Chinese goods.

"The affected sectors should be covered in an early harvest agreement. It can include products like gold jewellery, shrimp, carpets and machinery," said Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO).

Exporters have also raised the issue of dumping of Chinese goods from third countries, particularly from those with which India doesn't have any trade pacts.

The US gives preferential benefits on 50% value addition but India's criteria is minimum operation, which includes repackaging. This means Chinese goods imported into India can be exported after repackaging, trade insiders said.

"At the moment, the key concern is the orders in hand and what will be the sharing of the duty structure," said Pankaj Chadha, chairman of engineering exports promotion body EEPC. "New order discussions are not being held and it's a three-month order book that we have in hand. We have asked the government to expedite the BTA," he said.

There are about $7 billion worth of engineering goods orders in hand at present. Indian engineering exports to the US were $17.27 billion in April-February FY25, up 8.3% on year. "Our preliminary estimate is that engineering goods exports to the US could drop by $4-5 billion in the first year," Chadha said, adding that the exact impact on engineering exports to the US cannot be determined at present since it will depend on the ability of the American market to absorb these duties.

Cotton textile and apparel exporters said new orders are suspended. They have sought relief by limiting the damage to 10% baseline tariff.

"Turkiye, Egypt, Ethiopia and Latin American countries like Brazil face lower US duties, a cotton textile industry representative pointed out.

Exporters are also mulling collective bargaining with their American clients instead of individually dealing with them. "This is how the Chinese exporters have bargained in the past wherein they recovered their costs from the importers," an industrial machinery exporter said.