Chennai, Aug 16
The Tamil Nadu government has raised an alarm over the severe implications of the United States’ 25 per cent tariff on Indian exports, warning that the proposed escalation to 50 per cent could devastate the state’s manufacturing sector and cost millions of jobs.
In a detailed letter to Prime Minister Narendra Modi, Chief Minister M.K. Stalin highlighted that Tamil Nadu’s dependence on the US market is higher as compared to other Indian states.
While 20 per cent of India’s total goods exports worth $433.6 billion in 2024-25 went to the US, Tamil Nadu sent 31 per cent of its $52.1 billion exports there.
This heavy reliance, the Chief Minister warned, makes Tamil Nadu particularly vulnerable to tariff shocks.
The most affected sectors include textiles, apparels, machinery, auto components, gems and jewellery, leather, footwear, marine products, and chemicals. All of these are labour-intensive industries where any decline in exports would swiftly translate into mass layoffs.
The textile industry, which accounts for 28 per cent of India’s exports in the sector and employs nearly 75 lakh people in the state, faces an especially grave threat. Officials estimate that as many as 30 lakh jobs are at immediate risk if tariffs are doubled to 50 per cent.
To cushion the blow, CM Stalin urged the Centre to take urgent corrective measures. These include rectifying the GST inverted duty structure for the man-made fiber value chain by bringing it under a uniform 5 per cent GST slab, exempting import duty on all varieties of cotton, and providing collateral-free loans of up to 30 per cent under the Emergency Credit Line Guarantee Scheme (ECLGS) with a 5 per cent interest subvention and a two-year moratorium on repayment.
Further demands include enhancing RoDTEP (Remission of Duties and Taxes on Exported Products) benefits to 5 per cent and extending pre and post-shipment credit facilities to all textile exports, including yarn.
Industry consultations revealed similar challenges in other sectors as well.
To provide relief, CM Stalin requested the Union Government to launch a special interest subvention scheme for exporters hit by tariffs, accelerate Free Trade Agreements (FTAs) to offset market risks, and announce a financial relief package similar to the COVID-era moratorium on principal repayments.
The letter also drew parallels with Brazil, which recently introduced tax deferrals and credits to support its exporters.
Warning of an unprecedented crisis threatening Tamil Nadu’s manufacturing sector, CM Stalin called for urgent intervention from PM Modi in consultation with ministries and industry stakeholders.
He assured the Centre of Tamil Nadu’s full cooperation in implementing national-level measures to safeguard livelihoods and preserve the competitiveness of Indian exports.
