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India plans relief package for exporters hit by 50% US tariffs
The Ministry of Commerce and Industry has proposed measures to ease liquidity for exporters through collateral-free loans and subsidised interest rates.
India’s Union Cabinet will consider proposals for a broad support package for exporters hit by the US tariffs, people familiar with the matter said, as the country braces for an uncertain future with its largest export destination.
The Ministry of Commerce and Industry has proposed measures to ease liquidity for exporters through collateral-free loans and subsidised interest rates, the people said on the condition of anonymity since the information isn’t public. The Union Cabinet may take up the plan at its meeting on Wednesday or in the coming days, they said.
The relief measures are expected to be funded with the ₹2,250 crore the government had set aside for export promotion in Union Budget 2025, aimed at cushioning the impact of Trump’s tariff threats, they said. At the time, India-US ties were still warm and New Delhi expected to escape relatively unscathed. But relations have deteriorated sharply in recent months, with the White House imposing 50% tariffs in August to punish India for its trade barriers and oil purchases from Russia.
The tariffs are the highest in Asia, making Indian goods uncompetitive versus manufacturing rivals like Vietnam and Bangladesh. The US is India’s biggest export market, and the levies are expected to hurt labour-intensive businesses like textiles and jewelry the most.
Still, signs of a possible thaw have emerged, with leaders from both nations pledging in recent hours to resume trade talks.
There have been discussions to increase the amount allocated in the union budget, but talks are still at an early stage, the people said. The government aims to spend around ₹25,000 crore over the next six years to support exporters, the Press Trust of India reported last month.
India’s Ministry of Commerce and Industry did not respond to Bloomberg's request for comment on this story.
According to Pankaj Chadha, chairman of the Engineering Export Promotion Council of India, exporters are facing a loss of about 30% in US-bound shipments because of the higher tariffs, and they want the government to shoulder at least half of the burden. Exporters will also lobby the central bank to allow them to temporarily convert proceeds from their US business at a rupee rate that’s 15% lower than current levels, Bloomberg reported earlier.
With the US market turning uncompetitive, the ministry is also mulling support for exporters diversifying into Africa and Latin America by providing help with branding, packaging, warehousing and export compliance, the people said.
