EPCH Urges Urgent Government Action as U.S. Tariff Threatens India’s Handicrafts Sector

Delhi/NCR, 12th August 2025 – The Export Promotion Council for Handicrafts (EPCH) issues an urgent call for action following the United States’ imposition of a 50% tariff on Indian handicraft exports, a development that threatens the stability of the sector and the livelihoods of millions of artisans. The Council is urging government for targeted fiscal support, promotional incentives and accelerated diplomatic engagement to help exporters remain competitive and to protect the cultural heritage sustained by India’s artisan community.

Speaking on the crisis, Dr. Neeraj Khanna, Chairman – EPCH, said “the United States continues to be India’s largest and most significant market for handicrafts, accounting for USD 1.57 billion in exports in FY 2024–25, approximately 40% of India’s total handicrafts exports. The recent imposition of a 50% reciprocal tariff on Indian handicraft products, with the possibility of further increases, poses a serious threat to the viability of the sector. This tariff shock could lead to a decline of 25–30% in U.S.-bound exports, translating into a potential revenue loss of USD 400–450 million.

Underlining the strategic way forward Dr. Khanna added further that “to mitigate these risks, EPCH has proposed a set of urgent relief measures, applicable exclusively to shipments clearly documented as ‘Handicraft/Hand Crafted’. These include a 30% Cost Equalisation Incentive for U.S.-bound handicraft exports for two years or until tariffs are renegotiated; continuation of Interest Equalisation Scheme benefits with increased benefits from 3% to 6% for both manufacturer and merchant exporters and Income Tax exemptions be provided in line with erstwhile Section 80HHC of the Income Tax Act.

Highlighting the exporter community’s immediate concerns, Dr. Rakesh Kumar, Director General in the role of Chief Mentor, EPCH, and Chairman – IEML shared that “the situation demands urgent and targeted action. Our recommendations are designed to offset the immediate cost disadvantages, sustain buyer relationships and protect artisan livelihoods. At the same time, we are pressing for proactive engagement with the U.S. to secure preferential treatment for Indian handicrafts, given their cultural, labour-intensive, and sustainable value and we urge the government to act swiftly with both fiscal and diplomatic interventions to safeguard this sector’s future.”

Avdesh Agarwal, Chief Convener, EPCH said that “Our exporters are navigating one of the most challenging phases in recent years, facing sustained pressures on pricing, margins and market stability. The U.S. tariff hike brings added risks of order losses, reduced buyer confidence and working capital constraints, with the possibility of trade shifting to countries enjoying more favourable tariff terms. With timely and decisive government intervention, we can transform this challenge into an opportunity, strengthening our competitiveness and achieving renewed global recognition for India’s handicrafts.

R. K. Verma, Executive Director, EPCH shared that “We are working with the government to implement relief measures such as an Emergency Relief Fund, subsidised freight support for U.S.-bound consignments, enhanced Duty Drawback and RoDTEP rates, the implementation of targeted promotional schemes under the Export Promotion Mission Scheme at the earliest, a two-year moratorium on long-term loan repayments for exporters, accelerated bilateral engagement with the U.S. for tariff while simultaneously driving market diversification, product innovation, and long-term competitiveness”.