On Wednesday, Information Minister Ashwini Vaishnaw announced a key initiative aimed at guiding India away from tariff challenges. The cabinet approved a $5.1 billion package to support exporters, including 200 billion rupees in credit guarantees for bank loans.
This plan allocates 250.6 billion rupees over six years to support small exporters with affordable trade finance, logistics, and market assistance as part of an export promotion effort aimed at countering recent U.S. tariff hikes.
The new U.S. tariffs, such as a 25% duty on Russian oil imports, have increased tariffs up to 50% on products like garments, jewellery, leather goods, and chemicals.
Exporters noted that labour-intensive sectors, such as textiles, jewellery, and seafood, especially shrimp, suffering margins of just 3%-5%, have been hardest hit, causing job losses in Tamil Nadu and Gujarat, Prime Minister Narendra Modi’s home state.
The plan also includes a 200-billion-rupee credit guarantee scheme until March 2026, providing collateral-free loans to boost exporters’ competitiveness and market access, as explained by Vaishnaw. This scheme offers guarantees on loans up to 500 million rupees.
According to Federation of Indian Export Organisations President S.C. Ralhan, approximately 55% of India’s exports to the U.S., worth roughly $48 billion, face cost disadvantages compared to those of competitors from Vietnam, China, and Bangladesh, prompting a support request.
India’s merchandise exports to the U.S., its largest market, declined by nearly 12% year-over-year to $5.43 billion in September, following the imposition of a 50% tariff in late August, with engineering exports dropping by about 10%.
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On Monday, Trump announced that Washington was close to an agreement with India to strengthen economic and security ties, a deal that New Delhi hopes might lead to an initial reduction of tariffs.
