In order to capitalise on the opportunities likely to arise from the anticipated tariff hike on Chinese goods by the Trump administration, exporter bodies have sought a three-year dedicated fund with an annual outlay of ₹250 crore in the Budget of FY2025-26. They have also urged the government to extend the Interest Equalisation Scheme (IES).

These demands were made during a pre-Budget consultation chaired by Finance Minister Nirmala Sitharaman here on Thursday. She is scheduled to present the Union Budget on February 1.

“A marketing scheme to focus on the US with a corpus of ₹250 crore per year (₹750 crore overall) for three years may be launched to generate additional exports of $25 billion,” Ashwini Kumar, President of the Federation of Indian Export Organisations (FIEO) said.

Trump tariff

Trump is taking over as new US President on January 20. He said that China will face higher tariffs on its goods – by 10 per cent above any existing tariffs – until it prevents the flow of illegal drugs into the United States.

Sensing an opportunity, Kumar felt that higher tariffs on China can create a significant opportunity for Indian exports, particularly in sectors where China has previously been a dominant supplier. Based on a study undertaken by FIEO, India can replace China in sectors such as electronics and electrical equipment ($10 billion additional export potential), textiles and garments, toys, chemicals, auto components, footwear, furniture and home decor.

On interest rates, Kumar said the IES is currently available only till December 31, 2024, and that too to manufacturers in MSME (micro, small and medium enterprise) with an annual cap of ₹50 lakh per IEC (import-export code) holder, which is insufficient for many MSMEs.

“If the IES is extended, it would help level the playing field by reducing the cost of credit for Indian exporters, improving their price competitiveness in the global market,” he said, adding that for MSMEs, government should look for restoring 5 per cent subvention as it was reduced to 3 per cent when the repo rate got reduced to 4.4 per cent.

• Also read: Gem, jewellery exports dip 13% on weak demand

Gem & Jewellery

The exporters also sought tax benefits on R&D and infusing more equity to encourage large private sector shipping lines so that international trade happens through domestic shipping lines. Further, the gems and jewellery sector exporters urged budgetary support for the diamond industry for consumer education as the sector is witnessing a constant fall in exports.

They proposed that the government extends infrastructure status for jewellery parks so that the developers can get easy access to bank credit. The Gems and Jewellery Export Promotion Council (GJEPC) is developing the world’s largest jewellery park in Mumbai. “Similar parks are coming up at Meerut and Bengaluru. I propose to include jewellery parks in the harmonised list of infrastructure,” GJPEC Chairman Vipul Shah said. The council has also asked for duty drawback benefits for platinum.