Indian exporters are keeping their fingers crossed over the US move to refund reciprocal duty of 50 per cent levied on a range of Indian imports, with the process having started recently.
In February, the US Supreme Court ruled against the reciprocal tariff implemented by the US President Donald Trump and ordered its refund.
The US Customs and Border Protection opened an online Consolidated Administration and Processing of Entries (CAPE) portal on April 20 where US importers and authorised brokers must file claims with shipment data, tariff lines and proof of payment.
President of India Bullion and Jewellers Association, said the structure of the refund mechanism limits direct benefits to Indian companies, as only US-based importers, who actually paid the tariffs, are eligible to file claims.
Indian exporters have no direct legal route to claim these refunds, but can negotiate with US buyers by seeking rebate-sharing clauses or price revisions to recover absorbed tariff costs, he said.
Jewellery exporters are not directly receiving US tariff refunds, but the process has begun for their US buyers, he said.
The textile and apparel industry is also gearing up to claim the refund from US buyers.
Secretary General, Confederation of Indian Textile Industry said there is no clarity on the process but of course one thing is clear the refund is for the importers and what gets passed down to our exporters will completely depend on the kind of negotiations that was done.
There were various kind of negotiations between the exporter and importer. Some had split the additional tariff cost three ways or two ways or whoever bore whatever. So, the refund will be a based on that as also the kind of agreement they had drawn upon with them. So, it is all very unclear at the moment, she told businessline.
“We are adopting a cautious stance as there is no clarity as such on the process,” said an exporter in Tiruppur.
Another exporter highlighted the uncertainty around timelines despite official assurances. “On paper, they say 60 to 90 days after claim acceptance, but the real test is how quickly claims are processed and approved. Until we see the first few refunds coming through, it’s too early to draw conclusions.”
Exporters also emphasised the importance of engaging with US buyers to secure their share of the refunded duties. In many cases, we absorbed part of the tariff costs when contracts were signed on a duty-paid basis. We will now have to reopen discussions with buyers — whether through price revisions, credit notes, or rebate-sharing arrangements.
Executive Director, Textile Export Promotion Council of India, said the duty refund of about $4 billion will be available to US importers who have a legal claim to it.
Indian exporters’ share of refunds will depend on their contractual agreements with their importers during the period when the reciprocal tariffs were applicable, he said
More sectors
While the US move to refund reciprocal duty of 50 per cent levied on Indian imports is expected to benefit the textiles and capital goods exporters the most, other sectors are also gearing up to negotiate with their buyers for claiming the refund.
Indian exporters are supposed to receive about $12 billion in refunds from the US. Of the overall refunds, engineering goods, textiles and apparel exporters may account for about $8 billion, while the chemicals exporters will receive about $2 billion in duty refund.
The remaining $2 billion claim will be distributed among other sectors including gems and jewellery which was hit badly by the unrealistic tariff. The high tariff of 50 per cent between last April and November had pulled down gem and jewellery exports by 43 per cent to $3.54 billion against $6.29 billion logged in the same period last year.
In a bid to retain buyers, Rajagopal said few exporters have borne the burden of duty by offering deep discounts. With duty refunds announced, the moot point is whether the buyer will part with duty refund with the exporters.
Source from: https://www.thehindubusinessline.com/economy/exporters-keep-fingers-crossed-on-us-duty-refunds/article70893409.ece
