No Re-Routing, India Shouldn't Be Conduit To Bypass US' Higher Tariffs: Goyal Cautions Exporters

Commerce Minister Piyush Goyal cautioned Indian exporters to avoid letting high-tariff hit countries use India as a bypass or a conduit for sending goods to the US, according to sources.

At a meeting with exporters on Wednesday, Goyal warned against the use of such trade diversionary tactics to avoid any potential blacklisting by the US authorities.

Given that the US had imposed an additional 26% duty on India, it had slapped higher tariffs on neighbouring Asian economies — 104% on China, 46% on Vietnam, 32% on Indonesia, and 36% on Thailand.

This could've potentially led shipments from these nations come to India, and then being sent to the US to avoid the high reciprocal tariffs.

While US has paused tariffs for 90-day in case of non-retaliating trade partners, there's still no formal clarity on which countries have been exempted.

Government officials also suggested Indian exporters to not export their goods to the US through countries which are facing lower tariffs than India.

Separately, exporters said that they were looking for an extension or a fresh relaunch of the Interest Equalisation Scheme, with a 5% subsidy as against 3% previously. The previous IES ended on Dec. 31 last year and was crucial in giving subsidy on pre-shipment and post-shipment export credit to the micro, small and medium enterprises. According to sources, this is most likely going to happen within April in a bid to provide relief to exporters.