CURRENT CONTEXT : The USA has imposed an additional 25% tariff on Indian imports, affecting almost two-thirds of India’s exports by value to the US.

IMPACT ON INDIA

• Exports: May fall to USD 49.6 billion in 2025-26 from nearly USD 87 billion in 2024-25 (GTRI estimate).
• Most Affected Sectors: Labour-intensive industries like gems & jewellery, textiles, apparel, shrimp, auto components.
• Competitiveness: Indian products to lose edge over exporters from Vietnam, Bangladesh, Mexico.
• Foreign Inflows: Possible decline in FDI and volatility in FPI

WAY FORWARD

• Financial Support: Reinstate Interest Equalisation Scheme for low-cost MSME credit.
• Targeted Credit: Extend special credit lines for shrimp, apparel, jewellery, handicrafts.
• Export Incentives: Enhance RoDTEP and ROSCTL

Policy Support: Simplify regulations, rationalise duties on key raw materials (cotton, leather, gems).