India eyes $25 billion export opportunity in US amid China tariff dispute

These sectors include electronics and electrical equipment, footwear, textiles and garments, furniture and home decor, automotive components, toys, and chemicals

Ahead of the Union Budget 2025-26, exporters urged the finance ministry to approve a US-focused marketing scheme worth Rs 750 crore to generate an additional $25 billion in exports to the US over the next three years.

 

According to the Federation of Indian Export Organisations (FIEO), the US’ plan to impose higher tariffs on China presents a “significant opportunity” for Indian exports, particularly in sectors where China has been a dominant supplier.

 

These sectors include electronics, electrical equipment, footwear, textile, garment, furniture, automotive parts, toy, and chemical. The largest gains are expected in consumer electronics, such as mobile phones, televisions, and electrical components, with an estimated $10 billion in additional exports.

 

“For that, we need to increase our presence in the US by showcasing in numerous exhibitions, holding buyer-seller meetings, and partnering large local retailer associations. A marketing scheme focusing on the US, with a corpus of Rs 250 crore per year (Rs 750 crore overall) for three years, maybe launched to generate additional exports of $25 billion by the end of three years,” FIEO President Ashwani Kumar said.

 

In addition, FIEO has requested a tax deduction of 200-250 per cent for research and development spending under Section 35(2AB) of the Income-Tax Act to foster product innovation.

 

At a pre-Budget meeting with the finance minister and top officials from the finance ministry in North Block, exporters also called for the continuation of the interest equalisation scheme, which ends on December 31, along with additional funds for marketing and trade promotion of specific export items, and income-tax relief for micro, small and medium enterprise (MSME) manufacturing units.

 

The interest equalisation scheme (IES) provides interest rate benefits for pre- and post-shipment rupee export credits, with the government compensating lenders. This initiative aims to ease the financial burden on exporters, particularly those in labour-intensive sectors and MSMEs.

 

Engineering Exports Promotion Council of India Chairman Pankaj Chadha proposed increasing the annual benefit cap for MSME manufacturers from Rs 50 lakh to Rs 10 crore. This change would offer substantial financial support to MSME exporters.

 

FIEO noted that a long-term IES would enable exporters to secure orders more effectively, especially in sectors with wafer-thin profit margins, as a 3 per cent interest subvention could make the difference between winning or losing an order.

 

Gem & Jewellery Export Promotion Council Chairman Vipul Shah underscored the need for separate funding for marketing, particularly for diamonds.

 

Exporters also called for government support for energy audits and compliance with the carbon border tax. Chadha recommended reimbursing 50 per cent of these costs under the market access initiative scheme and providing targeted support for compliance with the carbon border adjustment mechanism to help MSMEs adopt sustainable practices and remain globally competitive.

 

Key steps to boost US exports

 

·         Launch a US-focused marketing scheme with a corpus of Rs 250 crore per year for three years

 

·         Generate an additional $25 billion in exports by the end of three years due to the US-China tariff war

 

·         Create opportunities for Indian exports in sectors where China has been a dominant supplier

 

·         Extension of the interest equalisation scheme, with additional funds for marketing, trade promotion, and income-tax relief for MSME manufacturers