Trump-Era tariffs on China Open $25 Billion US Export Window for India: Exporters to FM Sitharaman

FIEO identified the largest potential gain of $10 billion in the consumer electronics sector, where US firms are moving away from reliance on Chinese components due to security and trade concerns. India, already a prominent player in mobile phone assembly, stands to benefit significantly as global brands increasingly outsource production to the country, exporters said. Other sectors with substantial opportunities include textiles and garments, toys and games, chemicals, footwear, and furniture, each representing a $1 billion export potential. The automotive components sector could see an additional $1.5 billion in exports, exporters told the Finance Ministry.

FIEO also emphasised that rising input and freight costs have increased the burden on exporters, that now require extended credit periods to meet buyers’ payment timelines. IES has been a key tool in mitigating these challenges. This comes amid continued attacks in the Red Sea region, forcing global shipping lines to take longer routes.

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The IES is currently only available till December 31, 2024, and for manufacturers in micro, small and medium enterprises (MSMEs) with an annual cap of Rs 50 lakh per importer-exporter code (IEC) holder, which is insufficient for many MSMEs, FIEO said.

The trade body also pointed out that China, India’s major competitor, offers extensive subsidies and low-interest financing to its exporters, giving them an unfair advantage in global markets. Additionally, regional competitors like Vietnam, Thailand, and Indonesia benefit from favourable exchange rates and lower financing costs. FIEO warned that without extending IES, “India risks losing market share” to these emerging players.

Exporters expressed concerns over disruptions in the Red Sea region, emphasizing that the majority of India’s international trade depends on foreign shipping lines. They highlighted that MSME exporters are especially susceptible to high freight costs and supply chain interruptions.