Government rolls out $5.1 billion relief for exporters hit by US tariffs

• Cabinet clears Rs 450.6 billion ($5.1 billion) package to aid exporters hit by US tariff hikes
• Includes Rs 200 billion credit guarantee scheme for collateral-free loans till March 2026
• Exporters in labour-intensive sectors like textiles and jewellery hit hardest
• India’s exports to US fell nearly 12% year-on-year in September

India’s cabinet has approved a Rs 450.6 billion ($5.1 billion) support package for exporters to counter the impact of recent US tariff hikes, Information Minister Ashwini Vaishnaw said on Wednesday.

The package includes Rs 200 billion in credit guarantees on bank loans and Rs 250.6 billion over six years for affordable trade finance, logistics, and market access under an export promotion plan. The initiative aims to help small and medium exporters weather the hit from higher US duties.

Washington recently imposed tariffs of up to 50% on several Indian goods — including garments, jewellery, leather products, and chemicals — following concerns over New Delhi’s purchases of Russian oil. Exporters said the punitive duties, including a 25% levy related to Russian crude imports, have severely affected labour-intensive sectors such as textiles, jewellery, and seafood, where margins are typically between 3% and 5%.

“Several units in Tamil Nadu and Gujarat have reported layoffs due to shrinking export orders,” said industry sources familiar with the situation.

Vaishnaw said the new plan will operate until March 2026 and provide credit guarantees on loans of up to Rs 500 million, enabling exporters to access collateral-free financing and explore new markets.

According to the Federation of Indian Export Organisations (FIEO), nearly 55% of India’s exports to the US — valued at around $48 billion — have become less competitive compared to those from Vietnam, China, and Bangladesh. FIEO President SC Ralhan has urged the government for continued support to sustain jobs and maintain export momentum.

India’s merchandise exports to its largest market, the United States, fell nearly 12% year-on-year to $5.43 billion in September, after the new tariffs came into effect in late August. Engineering goods shipments alone declined by about 10%.

Earlier this week, former US President Donald Trump said Washington was close to an agreement with India to expand economic and security cooperation, a move New Delhi hopes will lead to at least a partial rollback of the punitive duties.

(With inputs from agencies)