Chennai, Aug 16 (PTI) Tamil Nadu Chief Minister M K Stalin on Saturday expressed concern over the possibility of the enhanced US tariff on Indian imports affecting the industry and employment, and demanded that the Centre provide a special financial relief package.

The package should include a moratorium on principal repayment, he told Prime Minister Narendra Modi in a letter.

While appreciating the efforts by the Centre to achieve a mutually beneficial trade agreement with the US, he also exteded full support to the country's position to defend national interests.

"In this context, I wish to bring to your attention a matter of considerable concern to Tamil Nadu, as it faces severe implications due to the current 25 per cent tariff and its potential escalation to 50 per cent." In the last financial year, while 20 per cent of India's total goods exports of USD 433.6 billion were to the US, 31 per cent of Tamil Nadu's USD 52.1 billion goods were exported to that country.

"This higher dependency on the US market clearly implies that tariff impact on Tamil Nadu will be disproportionately greater than for most other Indian states. Hence this tariff has significant implications for Tamil Nadu's manufacturing sector and employment scenario," he told PM Modi.

The most affected sectors are textiles, apparels, machinery, auto components, gems and jewelry, leather, footwear, marine products and chemicals, all labour-intensive sectors, wherein any export slowdown will quickly result in mass layoffs.

He said the southern state accounted for 28 per cent of the country's textile exports in 2024-2025, the largest contributor among all Indian states. The sector employs nearly 75 lakh people and with a 25 per cent tariff and a proposed 50 per cent tariff, an estimated 30 lakh jobs are at immediate risk, he said.

"To mitigate this crisis, it is essential to address structural issues that have long hindered our export competitiveness. In this regard, I had extensive consultations with the industry associations from the affected sectors. Based on these consultations, it is evident that the textile sector urgently needs support in two aspects-correction of the GST inverted duty structure for the man-made fiber value chain, by bringing the entire chain under a 5 per cent GST slab and exemption of import duty on all varieties of cotton," he said.

Extension of 30 per cent collateral-free loans under the Emergency Credit Line Guarantee Scheme with a 5 per cent interest subvention and a two-year moratorium on principal repayment, along with enhancing Remission of Duties and Taxes on Exported Products (RoDTEP) benefits to 5 per cent, extending pre and post-shipment credit to all textile exports, including yarn, have been highlighted as other important steps to strengthen our export competitiveness, Stalin added.

"Similar challenges are being faced by other sectors due to tariff impacts and competitive pressures in global trade. To provide immediate relief, the Union Government needs to consider introducing a special interest subvention scheme for all exporters affected by tariffs to improve liquidity and reduce cost burdens and accelerating Free Trade Agreements (FTAs) and bilateral arrangements to offset high-tariff market risks.

"Considering the scale of the problem, a special financial relief package including a moratorium on principal repayment, similar to the one implemented during the COVID period is necessary to support our exporters," he told Modi.

Government of Brazil has announced tax deferrals and tax credits to exporters, he pointed out.

"Tamil Nadu's thriving manufacturing sector is facing a never seen before crisis, threatening millions of livelihoods across various sectors. Hence, I request your urgent intervention in this matter, in consultation with the relevant ministries and industry stakeholders," the CM said. PTI SA KH

Special financial relief package sought to offset enhanced import tariffs, including moratorium and targeted subsidies. A regional executive requests a special financial relief package in response to enhanced import tariffs, seeking a moratorium on principal repayment, expansion of collateral-free emergency loans with interest subvention, a special interest subvention for affected exporters, and enhanced RoDTEP and pre/post-shipment credit for textiles. It also seeks GST correction for the man-made fibre value chain, exemption of import duty on cotton, and acceleration of FTAs and bilateral arrangements to offset tariff-driven market risks.