The impending US tariffs pose a significant challenge for Indian exports, particularly in labor-intensive sectors such as leather and textiles, which are now subject to elevated duties. This situation threatens to result in job losses in key states like Uttar Pradesh and Gujarat, where these industries are vital to local economies. The Modi administration's commitment to fiscal prudence suggests a reluctance to provide substantial financial support to affected businesses, opting instead for a more conservative approach. While a modest credit package is being contemplated, the potential risks for small exporters are considerable, raising concerns about their ability to weather the storm without adequate support.
The central takeaway from this scenario is the delicate balance the Modi government must strike between maintaining fiscal discipline and addressing the immediate economic fallout from US tariffs. By prioritizing a limited credit package over broader financial assistance, the administration risks exacerbating the vulnerabilities of small exporters already facing significant challenges. This situation underscores the need for strategic policy interventions that not only mitigate the impact of tariffs but also bolster the resilience of India's export sectors in the face of global economic shifts.
