The Govt is formulating a financial plan to help the manufacturers and exporters as the fear of high tariffs looms ahead.
According to Reuters, the Indian government is planning to provide assistance by giving credit guarantees for loans overdue up to 90 days for small businesses and exporters.
The report indicates that the centre has proposed to provide 10 to 15 per cent credit guarantees to banks for advancing loans to stressed small businesses. These are the businesses that fall under the Reserve Bank of India’s Special Mention Accounts.
Under the SMA category of the central bank, these loans, if not paid by a deadline of 90 days, are not declared non-performing assets.
As per the report, the government will allocate about 40 billion rupees for providing guarantees to banks
What are the conditions for Govt support?
The scheme is designed for firms that are stressed due to external factors “beyond their control”, and the eligibility criteria are being firmed up, the report says.
The criteria will cover small exporters who are currently facing uncertainties due to higher tariffs imposed by the U.S., a key market for Indian exports. The government estimates that about 55% of its merchandise exports to the United States will be subject to the tariff imposed by President Donald Trump‘s administration.
Separately, the Indian government is preparing a scheme to provide term loans for small exporters that would be backed by a government guarantee of a maximum of 70 per cent to 75 per cent, the report. The scheme was announced by India’s finance minister in the budget for 2025-26.
Manufacturers reach out to govt
Earlier, the Indian Seafood Export Association, an industry body, reached out to the government for financial assistance as the high tariffs threaten the $2 billion indian seafood export market.
Similarly, gems and jewellery manufacturers have also requested the government for policy change as they face one of the highest