During a recent Assembly session, Kerala Finance Minister K.N. Balagopal underscored the critical necessity of assistance from the Union government to navigate the significant repercussions stemming from new, substantial tariffs imposed by the United States on goods imported from India. The state is bracing for considerable economic challenges.
Responding to a motion raised by CPI(M) MLA P.P. Chitharanjan, Minister Balagopal revealed that he has already communicated the severe hardships experienced by workers across multiple industries due to these tariffs to the Union Finance Minister. Furthermore, the concern has been formally presented before the 16th Finance Commission, highlighting its national significance.
The Minister outlined several urgent proposals, including accelerating IGST refunds, providing essential energy subsidies, and delivering immediate relief packages for affected workers. He also emphasized the need for strategic interventions such as exploring new export markets, transitioning to rupee-based trade agreements to reduce reliance on dollar exchange rates, bolstering branding efforts, and enhancing collective bargaining for exporters. Additionally, establishing trade-friendly centers in non-U.S. countries and offering crucial support for small and medium-sized enterprises to meet global standards are vital steps that necessitate robust backing from the Union government.
The recently announced U.S. tariff policy, spearheaded by President Donald Trump, is set to severely impact critical export sectors in Kerala, including seafood, spices, cashew nuts, coir, and tea. Given that Kerala contributes a significant 12-13% of India’s total seafood exports, the new 20-25% tariffs — pushing the overall duty on shrimp past 33% — are particularly alarming. This has already resulted in cancelled orders from the U.S., a surplus of frozen stock, and processing facilities operating at less than 20% capacity. This crisis poses a direct threat to the livelihoods of numerous women employed in shrimp processing and could trigger widespread job losses across Kerala’s coastal areas, endangering the very existence of many small and medium-sized processing units.
Kerala is also a powerhouse in pepper exports, accounting for over 80% of India’s total. The proposed increase in duties to an alarming 50% will drastically erode the state’s competitive edge. Since the tariff announcement, exporters have already noted a 6% decrease in orders, with growing competition from countries like Vietnam and Indonesia adding to the pressure. Traditional industries such as cashew, coir, and handlooms are similarly vulnerable to these tariff threats. Furthermore, Kerala’s annual tea exports, valued at approximately ₹700 crore and heavily dependent on the U.S. market, have seen a steep drop in orders. Minister Balagopal warned that the U.S. tariff policy’s consequences extend far beyond mere trade statistics and financial losses, deeply impacting the social fabric of local communities intrinsically linked to these export sectors.