Make the most of free-trade agreements, PM Narendra Modi tells exporters

At a high-level meeting with export councils, PM Modi called on exporters to fully leverage India's FTAs amid US tariff hikes, while industry sought policy and financial relief

Prime Minister Narendra Modi has urged exporters to make the most of the existing free-trade agreements (FTA) that India has signed, and “leave their comfort zone” to capture new market opportunities. His comments come at a time when the United States (US) has imposed 50 per cent tariffs on several Indian products.

 

“The message by the Prime Minister was loud and clear – we have signed a few FTAs recently. Trade deals with the EU and the US are also in the pipeline and we will continue to sign FTAs with other countries as well. That’s the government job. However, FTAs alone cannot increase exports. All stakeholders will have to work hard, leave their comfort zones and make the best use/utilise the FTAs,” a person who attended the meeting told Business Standard.

 

On Monday evening, Modi met the heads of at least half a dozen export promotion councils across sectors such as handicrafts, leather, marine products, apparel, engineering, and gems and jewellery, which have been among the most affected by US tariffs.

 

The late evening meeting, which lasted around two hours, was also attended by Union Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal, Cabinet Secretary T V Somanathan, Principal Secretary to the Prime Minister Shaktikanta Das, Commerce Secretary Rajesh Agrawal, and Revenue Secretary Arvind Shrivastava.

 

So far, exporters have been holding meetings with the commerce and finance ministers to convey their concerns over tariff-related challenges, given that several sectors are heavily dependent on the US market. This is the first such meeting held at such a high level.

 

During the meeting, exporters raised concerns over the need for support through export-boost schemes such as the reintroduction of the Merchandise Exports from India Scheme (MEIS), the Market Access Initiative (MAI), certain governance reforms, correction of the inverted duty structure, and the interest subvention scheme for MSMEs, among others. They also sought financial support from the government, such as sharing the additional costs arising from the high tariffs imposed by the US.

 

The exporters further urged the PM to take a tough stance in the India-EU FTA negotiations and to provide relief measures for Indian exporters to deal with the Carbon Border Adjustment Mechanism (CBAM).

 

According to commerce department data, India’s total shipments to the US contracted 11.9 per cent in September to $5.5 billion, marking the fourth consecutive decline in value terms.

 

Exports of gems and jewellery to the US were hit the hardest in September, reflecting the full impact of the 50 per cent tariff that took effect during the month. Shipments of pearls, precious and semi-precious stones plunged 76.7 per cent, while exports of gold and other precious metal jewellery dropped 71.1 per cent.

 

During the month, exports of cotton fabrics and madeups (-36.2 per cent), marine products (-26.9 per cent), industrial machinery for dairy (-28.1 per cent), readymade garments (-25 per cent), drug formulations (-16.4 per cent) and auto components (-12 per cent) also contracted in double digits. The US accounts for 37 per cent of India’s total exports of precious stones and 28 per cent shipments of gold jewellery.