Indian officials are expressing serious concerns about the long-term repercussions of heightened tariffs imposed by the U.S. on Indian goods, particularly for the nation’s vital marine export sector. This sentiment was conveyed to the Public Accounts Committee (PAC), chaired by senior Congress leader K.C. Venugopal, during a recent meeting.
The PAC convened to review the ‘Performance audit report on the Export Promotion Capital Goods Scheme,’ a key initiative designed to bolster India’s manufacturing competitiveness.
During the discussions, specific attention was drawn to the impact of U.S. tariffs. Rajesh Agarwal, Special Secretary, Department of Commerce, reassured the committee that concerns regarding the Indian pharmaceutical sector were largely unfounded. He noted that China, India’s primary competitor in this arena, is contending with similar tariff burdens. However, Mr. Agarwal did acknowledge the significant, negative long-term implications these high tariffs would have on overall trade.
Lawmakers from both political factions, including Chairman Venugopal, voiced apprehension regarding India’s marine exports. Several members highlighted the potential severe impact on numerous coastal communities should shrimp exports experience a drastic decline.
The U.S. has notably imposed steep tariffs, including a 50% duty effective August 2025, which has created considerable challenges for Indian marine products, especially shrimp. When combined with existing levies, Indian shrimp exports now face an effective duty exceeding 58%. According to sources, Mr. Agarwal conceded that these elevated tariff barriers place India at a distinct disadvantage compared to its international rivals.
In response to these challenges, Mr. Agarwal informed the panel that India is aggressively pursuing new market opportunities through Free Trade Agreements (FTAs). These efforts include negotiations with blocs like the European Free Trade Association (EFTA) – comprising Iceland, Liechtenstein, Norway, and Switzerland – and the U.K., with the goal of eliminating current duties.
Recent discussions with EU negotiators in India underscore the nation’s proactive approach to trade diversification. Mr. Agarwal further stated that India is focused on registering more marine export units in the EU and exploring new partnerships with countries such as Russia, all aimed at broadening its export base.
Separately, the committee voiced dissatisfaction with the ambiguous outcomes of the Export Promotion Capital Goods Scheme. This program aimed to facilitate the import of essential capital goods for producing high-quality products and services. With duties totaling ₹42,714 crore forgone between fiscal years 2018-19 and 2020-21, the panel has instructed the government to provide clear evidence of the scheme’s contribution to the growth of the manufacturing sector.