India-US trade: Amid the trade standoff with Washington, the Indian government is considering a broad support package for exporters struggling with newly imposed US tariffs. According to a Bloomberg report, the Ministry of Commerce and Industry has drafted proposals to provide liquidity through collateral-free loans and subsidised interest rates. Officials familiar with the matter said the plan could be taken up by the Union Cabinet this week or in the coming days.
The relief package is expected to be funded with Rs 22.5 billion ($255 million) already earmarked in February’s federal budget for export promotion. At the time, relations between New Delhi and Washington remained relatively cordial, but the landscape shifted sharply when the Trump administration imposed 50 per cent tariffs on Indian goods in August.
Tariffs make Indian exports uncompetitive
The measures represent the steepest tariffs in Asia and threaten India’s position in its largest export market. With the US buying a significant share of Indian textiles, jewellery and engineering goods, exporters fear a severe contraction. Pankaj Chadha, chairman of the Engineering Export Promotion Council of India, told Bloomberg that shipments to the US are facing a 30 per cent loss in value, and businesses want the government to absorb at least half the cost.
Exporters are also preparing to lobby the Reserve Bank of India for a temporary reprieve on currency conversions. They want proceeds from their US business to be converted at a rupee rate 15 per cent lower than market levels, in order to cushion the blow of the tariffs.
Govt exploring budgetary expansion and long-term support
Officials told Bloomberg that the government may expand the budget allocation for exporters. Last month, the Press Trust of India reported that New Delhi is considering spending about Rs 250 billion over the next six years to provide sustained support. This could come through direct subsidies, financing assistance, and marketing support in new overseas markets.
The commerce ministry has yet to comment publicly, but officials acknowledge that exporters in labour-intensive sectors are at the highest risk. These industries, which employ millions across India, could see a sharp decline in competitiveness as rivals such as Vietnam and Bangladesh gain ground in the American market.
India-US relation
Despite the deepening rift, recent exchanges between President Donald Trump and Prime Minister Narendra Modi have signalled the possibility of renewed dialogue. Both leaders have indicated a willingness to resume trade talks, though no timeline has yet been set. For New Delhi, balancing its energy security particularly its oil purchases from Russia with the need to protect exports to the US remains a delicate act.
In the near future, the government is also considering measures to help exporters branch out into non-traditional markets. Support for branding, packaging, warehousing and compliance in Africa and Latin America is under discussion, officials said. While such diversification will take time, the government see it as essential to reduce reliance on the US and to shield exporters from future shocks.