Exporters Seek Rs 750 Cr To Tap Huge $25 Bn US Potential

New Delhi: Exporters on Thursday sought a fund of Rs750 crore for three years to tap $25 billion export potential in the US, aiming to seize potential opportunities that may arise as the US President-elect, Donald Trump, has threatened to impose high tariffs on Chinese goods.

In its pre-Budget meeting with the finance ministry, Federation of Indian Export Organisations (FIEO) President Ashwani Kumar has also demanded extension of the five per cent Interest Equalisation Scheme (IES). “A marketing scheme to focus on the US with a corpus of Rs250 crore per year (Rs750 crore overall) for three years may be launched to generate additional exports of $25 billion,” Kumar said.

He said that higher tariffs on China can create a significant opportunity for Indian exports, particularly in sectors where China has previously been a dominant supplier. Based on a study undertaken by FIEO, India can replace China in sectors like electronics and electrical equipment ($10 billion additional export potential), textiles and garments, toys, chemicals, auto components, footwear, furniture and home decor.

He added that India’s marketing strategy for exporting products to the US should focus on several key areas, particularly on marketing and forming strategic partnership. “We have already started contacting key trade associations to present India’s sourcing opportunity,” Kumar said, adding, “We should focus on participating in a large number of exhibitions in these sectors”. On interest rates, the President said that the IES is currently available only till December 31, 2024, and that too to manufacturers in MSME (micro, small and medium enterprise) with an annual cap of Rs50 lakh per IEC (import-export code) holder, which is insufficient for many MSMEs.

He said India experiences higher domestic interest rates compared to its competitors, especially advanced economies or countries with export-driven economies like China, Japan, South Korea, Euro Zone, Thailand or Malaysia. This makes financing for Indian exporters more expensive than for exporters from these countries. “If the IES is extended, it would help level the playing field by reducing the cost of credit for Indian exporters, improving their price competitiveness in the global market,” he said. “For MSMEs, we should look for restoring 5 per cent subvention as it was reduced to 3 per cent when the repo rate got reduced to 4.4 per cent. With the repo rate moving up by over 2 per cent, it makes a strong case for restoring subvention to the original level of 5 per cent and 3 per cent, respectively,” Kumar noted.

The exporters also sought tax benefits on R&D, and infusing more equity to encourage large private sector shipping lines so that international trade happens through domestic shipping lines.