Market share, Pg 2.

Key Highlights:

• New tariffs effective August 27 are reversing India's comparative advantage in exports like leather, shrimp, textiles, and apparel.
• Indian policymakers are focused on maintaining market share amidst these tariff changes.
• The government is considering support measures like collateral-free loans, subsidized interest rates, and credit guarantees for exporters.
• India's merchandise exports to the US could fall to $49.6 billion in FY26 from nearly $87 billion in FY25 due to tariffs.

Detailed Insights:

• The Central government anticipates a reduction in secondary tariffs on Russian oil imports, but recognizes the difficulty in regaining lost market share.
• Likely policy measures include reviving pandemic-era schemes to provide liquidity and credit support to exporters, especially MSMEs.
• The government aims to formulate general relief measures for exporters to avoid triggering countervailing duties from the US.
• The industry has requested the restoration of the Interest Equalisation Scheme (IES) to reduce the cost disadvantage for Indian exports.
• Some exporters are exploring opportunities in the domestic market, engaging with retailers like Reliance Retails and the Aditya Birla Group.
• Global Trade Research Initiative estimates that two-thirds of India’s US exports will face 50% tariff rates, raising effective tariffs to over 60% for some products.
• The US accounts for 20% of India’s merchandise exports, with product categories like textiles, gems, and shrimp facing the most significant impact.

Key Concepts Involved:

• Market Share: The percentage of a market that a specific company or product holds.
• Countervailing Duty: Import duties imposed to neutralize the negative effects of subsidies.
• Interest Equalisation Scheme (IES): A scheme to provide competitiveness to exports, especially to the MSMEs, since the interest costs in India are much higher than in competitors’ countries.