Consider financial relief package to exporters to offset US tariffs impact: Stalin to PM Modi

Chennai: With several sectors like textiles, apparels, machinery, auto components, leather, and footwear in Tamil Nadu to be affected due to US’ 50 per cent tariff on Indian imports, Chief Minister M K Stalin on Saturday nudged Prime Minister Narendra Modi to announce special financial relief package including a moratorium on principal repayment to support exporters. 

In a letter to Modi, Stalin said in the last financial year, while 20% of India’s total goods exports of USD 433.6 billion were to the United States, 31% of Tamil Nadu’s USD 52.1 billion goods exports went there, to drive home the point that the state has higher dependency on the US market which will be disproportionately greater than for most other Indian states.  

Stalin also demanded that the Union Government consider introducing a special interest subvention scheme for all exporters affected by tariffs to improve liquidity and reduce cost burdens and accelerate Free Trade Agreements (FTAs) and bilateral arrangements to offset high-tariff market risks.

“The most affected sectors are textiles, apparels, machinery, auto components, gems and jewellery, leather, footwear, marine products and chemicals. Even more concerning is that all these sectors are labour-intensive, wherein any export slowdown will quickly result in mass layoffs,” Stalin said. 

He added that the country’s textile sector employs nearly 75 lakh people and with a 25% tariff and a proposed 50% tariff, an estimated 30 lakh jobs are at immediate risk. Stalin asked the Centre to correct the GST inverted duty structure for man-made fiber value chain, by bringing the entire chain under a 5 per cent GST slab and exemption of import duty on all varieties of cotton. 

“In addition, extension of 30% collateral-free loans under the ECLGS with a 5% interest subvention and a two-year moratorium on principal repayment, along with enhancing RoDTEP benefits to 5%, extending pre- and post-shipment credit to all textile exports, including yarn, are needed,” the Chief Minister added. 

He said the government should consider an initiative at the national level like the one from the Government of Brazil which has announced tax deferrals and tax credits to exporters.

Tiruppur, the knitwear hub, alone is expected to lose Rs 6,000 crore in the immediate future if the tariffs are not removed.