Budget 2026 May Announce Special Incentives for Affected Exporters
The US's imposition of a 50% tariff on Indian goods has affected exports of employment-intensive sectors such as leather, gems, jewelry, and textiles. Special incentives for these sectors may be announced in the upcoming budget. The government is considering providing assistance to exporters whose businesses depend on the US, as uncertainty over the trade agreement persists, which could impact employment.
Exports in the employment-intensive sectors seem to be impacted since the imposition of the 50 percent tariff on Indian goods last August by the US. These sectors comprise the export of leather items, gems and jewelry, garments, engineering goods, and handicrafts.
Incentives for these items may be separately announced in the budget that is to be presented on the 1st of February. Exports of these sectors to the US started getting affected as early as last September. From then, these sectors have been demanding separate incentives or any other kind of financial help for the boosters of their exports.
The Finance Ministry had asked them to first assess their losses, and then the government would take financial assistance accordingly. By last November, there was every hope of a trade agreement between the US and India.
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Therefore, the government was adopting a wait-and-see approach regarding providing financial assistance to these sectors. Currently, no assurances can be made regarding a trade agreement between India and the US. Commerce Ministry officials have also clearly stated that an agreement could be reached at any time, but a timeline cannot be set.
According to sources, in such a situation, the government may provide separate assistance to export incentives for sectors whose exports are most affected or who are now receiving significantly fewer or no export orders from the US. Many exporters whose export business depends solely on the US market employ hundreds of people.
If their export orders are cut, they will have to reduce their production, which will also impact employment.
