RBI Governor to Meet Exporters Seeking Urgent Support
Indian exporters are set to meet RBI Governor Sanjay Malhotra on September 11 to seek crucial support as they face challenges due to rising US tariffs. This meeting follows a recent discussion with Finance Minister Nirmala Sitharaman, highlighting the urgency of their situation. Exporters are particularly concerned about maintaining long-term relationships with US buyers while navigating the pressures of increased tariffs.
Exporters have indicated that front-loading exports could provide temporary relief against tariff impacts. However, they fear that sustained high tariffs could lead to broader economic stress and potential job losses in the sector. Pankaj Chadha, Chairman of the Engineering Export Promotion Council, emphasized the need for a collaborative approach to bridge the 30% tariff gap with competitors. Without government and industry intervention, exporters may struggle to remain competitive.
The Federation of Indian Export Organisations (FIEO) has urged measures such as waiving penal interest on export loans to alleviate the financial burden caused by tariffs. They also recommend extending a moratorium on principal and interest payments for export credit to provide exporters with additional breathing room. This would help prevent the classification of certain export exposures as Non-Performing Assets (NPAs) due to delayed payments.
To foster new market entry, exporters are advocating for the introduction of a sovereign-guarantee window of up to ₹25 crore per exporter. This would enable them to explore new markets without collateral for a limited time. With the US accounting for a significant portion of India’s merchandise exports, the potential decline in exports due to tariffs poses a serious threat to the economy.
According to estimates, India’s merchandise exports to the US could plummet by 40-45% in the next fiscal year. This drop could lead to a drastic reduction in export value from $87 billion to approximately $49.6 billion. Notably, while certain categories like pharmaceuticals remain exempt from tariffs, many others will be significantly impacted, intensifying the urgency for supportive measures from the RBI.
As exporters prepare to voice their concerns, the outcome of this meeting could shape the future of Indian exports and their ability to compete in the global market amidst challenging conditions.
