Chief Minister Pinarayi Vijayan announced in the state assembly on Tuesday that new US tariffs could slash export revenue from eight key products by 40-60%, threatening the state's Rs 4,503 crore (US $510.56 million) export market. The assessment, conducted by experts from the State Planning Board and the Gulati Institute of Finance and Taxation, highlights the severe economic impact expected in the next financial year.
Key products such as spices, seafood, and cashew are projected to face the steepest decline, with a 60% drop in revenue. These two sectors alone account for over half of the state’s export earnings. Other critical products, including handmade carpets (excluding silk), rubber products (excluding footwear), tea, and coir, are expected to see their revenue halved. Ready-made garments, another significant export, will likely experience a 40% reduction.
The state’s export economy, heavily reliant on these eight products, has averaged Rs 4,503 crore annually over the financial years 2023, 2024, and 2025. The looming tariffs threaten not only the livelihoods of exporters but also the broader economic stability of Kerala, where these industries employ thousands of workers.
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In response to the crisis, the state government has taken proactive steps. Chief Minister Vijayan revealed that the issue was raised with Prime Minister Narendra Modi in July, highlighting the potential devastation to Kerala’s economy. A further representation was made to the 16th Finance Commission on September 11, urging immediate action to mitigate the impact.
“We are actively monitoring the situation and engaging with exporters to assess the full scope of the damage,” said Vijayan. “We are also exploring alternative markets, leveraging India’s bilateral trade agreements to diversify our export destinations and reduce dependency on the US market.”
The state government is considering additional measures, such as providing financial support to affected exporters and investing in trade promotion initiatives to tap into emerging markets. However, with the US being a major trading partner, the road ahead remains challenging. Exporters are bracing for tough times, and the ripple effects could impact local farmers, artisans, and small-scale industries integral to Kerala’s economy.
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