Government Forms Committee to Address Export and Tax Hurdles Amid US Tariff Shock

New Delhi, September 3 – Days after the newly imposed tariffs by the American President came into effect, the government has constituted a high-level committee to review tax structures and export clearance procedures to analyse the impact on manufacturing units. Numerous key export-oriented industries have faced a significant reduction in demand since the duty was announced.

Committee Composition

The committee panel includes representatives from the Finance Ministry, the DPIIT (Department for Promotion of Industry and Internal Trade), DGFT (Directorate General of Foreign Trade) and the RBI. The panel will also have special invitees from various sectors, the Federation of Indian Export Organisations, export promotion councils, and leading consultancy firms.

Mandate of the Panel

The purpose of the committee is to examine the existing export tax regime that includes customs duties and incentives. The panel will also evaluate the clearance processes and how they impact competitiveness. It will also identify the challenges faced by key industries such as engineering, pharmaceuticals, electronics, chemicals, agro and processed food, textiles, leather, gems, and jewellery.

The constituted panel will consider global benchmarks and best practices in export taxation, recommending reforms to address existing and potential issues in the sectors. The report shall be submitted within two months.

Impact of US Tariffs

The urgency of the review stems from the United States’ imposition of a steep 50 percent tariff on Indian goods from August 27, a move that threatens to erode the competitiveness of India’s labour-intensive exports in America.

By contrast, rival exporters such as Vietnam, Bangladesh, and Thailand continue to enjoy lower tariffs, giving them a significant advantage in the US market.

US: A Key Market for India

The United States remains India’s largest export destination, accounting for nearly 20 percent (USD 86.5 billion) of the country’s total goods exports of USD 437 billion in FY 2024-25. The new tariff regime is expected to weigh heavily on this trade flow, particularly in sectors with thin profit margins.

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