Govt working on support measures to help exporters deal with 50% US tariff

New Delhi: The Government is working on extending support measures for exporters such as rollout of export promotion mission, and moratorium on loans to help them insulate from the impact of US's 50 percent tariffs on Indian goods, an official said on Thursday.

The government official also said this is a wake-up call and opportunity to diversify the export basket.

Exporters have sought help at the liquidity front and these suggestions are under consideration, the official added.

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"The government is seized of issues being faced by exporters, and positive work is going on to help them," the official said adding diversification of exports, implementation of new free trade agreements (FTAs), rolling out of support measures and growing domestic market will help provide cushion to the industry from the impact of US tariffs.

The other measures which are under consideration include emergency credit line guarantee scheme for MSME exporters in tariff-hit sectors, moratorium on export loans to allow exporters operational space without asset downgrades, and extension of export realisation period to ease cash flow challenges caused by longer payment cycles.

"The Government is trying to speed up the rollout of the export promotion mission and expediting the e-commerce export hub scheme," the official said.

The government is considering support measures worth about Rs 25,000 crore for exporters under this mission, announced in the Budget, for six financial years (2025-2031). It is proposed to be implemented through two sub-schemes - Niryat Protsahan (over Rs 10,000 crore) and Niryat Disha (over Rs 14,500 crore).

These steps are important as imposition of 50 percent tariffs (25 percent additional duty and 25 percent penalty on India for buying Russian crude oil and military equipment) on Indian goods from August 27 will hit shipments of labour-intensive sectors such as machinery, shrimp, textiles, leather and footwear, gems and jewellery.

Sweeping duties will have a bearing on the order books of exporters as these taxes will make Indian goods less competitive in the US market as compared to its competitors like Vietnam, Bangladesh and Thailand, which are being subjected to lower tariffs by the US.

Cancellation or slowdown in orders may lead to liquidity crunch and for that, the industry is seeking intervention of the government.

Exporters are seeking measures such as resumption of interest subsidy for five years, export credit support to sustain working capital and liquidity, low cost of credit and easy availability of loans, moratorium on payment of principal and interest for loans up to a period of one year.

They have stated that it is difficult to export to the US with these high tariffs.

"We are considering their suggestions. We are trying something tangible with long term benefits," the official said, adding the industry is worried but the losses from these tariffs would be there only in the short run.

Exporters that are dependent completely on the US market will have major issues.

The commerce ministry is also holding a series of meetings with exporters on issues like diversification of exports and exploring new markets.

India's exports to the US during the first four months of this fiscal year have risen 21.64 percent to USD 33.53 billion. It was USD 86.5 billion in 2024-25. About half of this is out of the ambit of 50 percent tariffs.

The US accounted for about 20 percent of India's USD 437.42 billion worth of goods exports in 2024-25. America has been the largest trading partner of India from 2021-22. In 2024-25, the bilateral trade in goods stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports).

Meanwhile, exporters body FIEO said that Finance Minister Nirmala Sitharaman on Thursday assured an exporters' delegation that the government stands firmly with them in this challenging time and is committed to addressing their concerns, while exploring every possible avenue to safeguard their interests amidst high US tariffs.

The assurance was given to a delegation of the Federation of Indian Export Organisations (FIEO) led by its President S C Ralhan.

They apprised her of the challenges faced by Indian exporters due to the recent escalation of tariffs imposed by the United States.

"The Finance Minister reassured the delegation that the government stands firmly behind Indian exporters in this hour. She emphasized that the government is committed to addressing all concerns of the exporting community and will explore every possible avenue to safeguard their interests," the FIEO said.

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