BT Explainer: How will Indian exporters recover duties paid from US?

The US has opened an online portal to refund close to $166 billion in tariffs following the US Supreme Court striking down the reciprocal tariffs earlier this year. The refund of duties imposed under the International Emergency Economic Powers Act (IEEPA) will largely be available to importers and customs brokers in the US and will then have to be passed down to exporters who had to bear the cost of the higher tariffs.

The system run by US Customs and Border Protection (CBP) for CAPE (Consolidated Administration and Processing of Entries) was opened on April 20. To avail discounts, importers and authorised brokers would have to filed claims with shipment data, tariff lines and proof of payment.

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“Importers and authorised brokers should anticipate that valid IEEPA refunds will generally be issued within 60 - 90 days following acceptance of the CAPE Declaration, unless a compliance concern requires further CBP review,” as per the portal of IEEPA duty refunds.

For Indian exporters, the refunds are of special interest given that India was subject to the highest reciprocal tariffs by the US, which totalled 50%, including a 25% punitive tariff for buying Russian crude oil.

Over 50% of India’s exports to the US, largely from sectors like textiles and apparel faced these high tariffs, and exporters in the sector would be eligible for refunds. As per an analysis by the Global Trade Research Initiative, of the estimated $12 billion linked to India, textiles and apparel may account for about $4 billion, engineering goods another $4 billion, and chemicals about $2 billion, with smaller shares from other sectors.

However, for Indian exporters, the refunds may not come through automatically. “Payments go only to US importers, and exporters have no legal right to claim them. Indian exporters, therefore, have no direct legal route to claim refunds,” said Ajai Srivastava, Founder, GTRI.

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It is expected that they may take help from industry bodies to claim refunds or also petition the government for help. Industry sources said that they are still understanding the portal to see how they can go about for seeking refunds.

“Indian exporters would obviously like to be compensated to some extent, if not fully, for the duty they had paid. Most may not have such a clause in their contract with buyers but given the long-term relationships they have, it is hoped that they will provide exporters with a credit note or possibly adjust the cost differential in a future shipment,” said an industry source, pointing out that the portal has just opened.