The Reserve Bank of India (RBI) is holding consultations with exporters on the kind of support that may be required to help them overcome challenges they face due to disruption in shipments, following the 50 per cent additional tariff imposed by the US.
“Some consultations are planned later this week,” an industry source told TOI, adding that the small and medium-sized entities, which are part of the value chain may be the worst hit.
While American President Donald Trump has imposed a 25 per cent additional tariff on all Indian exports to the US, he has announced plans to double it to 50 per cent starting Wednesday. According to official estimates, around 55 per cent of India’s exports to the US, estimated at $86 billion last year, will be affected as certain exemptions are currently in place, such as those for pharma and mobile phones.
The overall assessment is that labour-intensive sectors, such as textiles, leather goods, gems and jewellery and engineering products will be worst hit and may need some handholding.
The central bank is seen to be assessing the impact of the action on banks and the overall economy as the exposure of lenders remains small. RBI’s meeting with exporters comes at a time when banks have also held some preliminary consultations and are looking at ways to ensure that the hit is not severe. At a time when the overall credit portfolio is healthy, the central bank’s intervention will help build the necessary confidence into the system with steps likely in the coming weeks if the problem persists.
With orders likely to be put on hold, several exporters who have already availed of credit and have invested in creating capacity may find it tough to service the debt until they find newer markets or until the tariff issue is resolved. Some of these exporters will need some assistance from banks.
At the end of May, outstanding export credit was estimated at around ₹12,000 crore, over 7 per cent higher than a year ago.
