Donald Trump tariffs on India: RBI to sit with industry stakeholders to assess impact; check details

With Donald Trump’s 50% tariffs coming into effect, the Reserve Bank of India (RBI) is set to convene discussions with business stakeholders to evaluate the impact across various sectors. These consultations are scheduled for September, ahead of the next review by the monetary policy committee.Industry exporters have requested various relief measures, including a one-year interest payment suspension on principal, automatic 30% increase in bank limits, lending without collateral, and interest equalisation for MSMEs to address the current difficulties. The timing of this meeting is crucial, as new punitive tariffs imposed on India are now active, with potential implications for 55% of the annual $48-billion exports to the US.

The sectors expected to face significant challenges from these tariffs include labour-intensive industries such as textiles and apparel, gems and jewellery, and marine products.

US tariffs: RBI signals readiness to step in

The unprecedented high tariffs would expose Indian exports to the US to a competitive disadvantage of 30-35%, reducing India's market position compared to similar products from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian nations.

"A consultation is being planned in the wake of an uncertain international economic environment due to tariffs and trade policies," an official aware of the details told ET.Officials from RBI and industry leaders plan to hold discussions regarding the India-UK Comprehensive Economic and Trade Agreement (CETA), according to the mentioned official. The central bank's monetary policy committee has scheduled its next meeting between September 29 and October 1.Also Read | ‘Deal dependent upon…’: India indicates no compromise on red lines for US trade pact; ‘we cannot overlook some..’During an industry event in Mumbai, RBI governor Sanjay Malhotra addressed on Monday the bank's readiness to protect the economy from the effects of Washington's decision to levy 50% tariffs on Indian merchandise exports. He highlighted initiatives to encourage trade using local currencies as a step towards rupee internationalisation. "RBI has always been very proactive in whatever needs to be done for the betterment, advancement and growth of our country," Malhotra stated at the event. He noted that whilst 45% of merchandise exports remain unaffected by the tariff structure, certain sectors including gems and jewellery, textiles, shrimp cultivation and MSMEs could face adverse impacts."This stakeholder consultation is important as the impact of the US tariffs is becoming visible on clusters such as Surat, Kanpur and Tiruppur, with fewer shifts at work," said Anil Bhardwaj, Secretary General, Federation of Indian Micro Small & Medium Enterprises.

"MSMEs need credit support to sustain working capital and liquidity. Else, the situation may worsen by Diwali,” he told ET.

The textile sector, which exported $6-7 billion worth of apparel to the US in FY25, traditionally received 70% of orders during July-September."However, this year, US market orders for spring and summer have almost reduced to a nought after America decided to slap 50% tariffs on Indian imports," said Animesh Saxena, general secretary, Garment Exporters &Manufacturers Association.The MSME sector is now anticipating relief through the India-UK CETA, pending ratification. Upon implementation, this agreement could provide a substantial alternative market to counterbalance the effects of the US tariff measures.Also Read | ‘Country first, commerce later’: Indian refiners unlikely to stop Russia crude oil trade under US pressure; ‘message from government is…’