
Indian exporters face tighter loan scrutiny amid Trump's 50% tariffs
What's the story
In light of US President Donald Trump's recent decision to impose a 50% tariff on Indian exports, Indian banks are tightening their scrutiny of new loan applications from exporters. The move comes as part of an effort to assess the financial impact of these punitive levies on their clients, particularly those in export-oriented sectors such as textiles and gems and jewelry.
Scrutiny details
Banks seek to understand potential risks
Banks are now asking exporters about their exposure to the US market and their contingency plans for dealing with Trump's steep tariffs. The lenders are also looking into financial parameters like revenue share from the US to identify potential risks. Some export orders are being put on hold while trade talks between New Delhi and Washington progress further.
Adaptation strategies
Exporters modifying strategies
In response to the unexpected levies, Indian exporters are already modifying their strategies. These include diversifying into other markets, relocating production outside India, and considering acquisitions in the US. Some financially strong exporters can withstand losses for a year or two but fear long-term business loss to competitors from Bangladesh and Pakistan, which have lower US tariffs than India.
Government response
Government engaging with exporters to gage impact
India's Commerce Minister Piyush Goyal recently told Parliament that the government is engaging with exporters to gage the impact of tariffs. He assured that "all necessary steps" would be taken to protect and promote national interest. The Gem and Jewelry Export Promotion Council has sought financial relief, duty drawbacks, and other measures such as a six-month interest moratorium on working capital facilities.