The Modi government plans short-term relief and easier credit for exporters hit by President Trump’s 50% tariff. Officials will combine cash support with the Export Promotion Mission while trade talks with the US continue.
After cutting GST rates to give shoppers relief, the Modi government is now preparing help for exporters who face a sharp new hurdle: US President Donald Trump’s 50% tariff on many Indian goods. Officials say the package will focus on credit, short-term cash support and help to find new markets while talks with the US continue.
In late August, the United States raised import duties on many Indian products to 50 per cent. The higher duty followed an earlier 25 per cent tariff and took effect on August 27. The move hit a wide range of Indian exports and surprised many businesses. Reuters The Guardian
Why exporters are in trouble
A 50% tariff makes Indian goods much more expensive in the US market. Buyers there may choose cheaper products from other countries. Many exporters fear orders will fall and sales will drop. Textile and apparel makers, gems and jewellery firms, leather and footwear makers, chemicals, engineering goods makers and marine and agricultural exporters are among the hard-hit sectors. Small and medium exporters are especially at risk because they work with thin profit margins.
What the government is planning to do
Government sources reportedly say ministers are preparing a relief package for exporters. The plan is likely to include easier access to credit, faster refunds, lower interest support and short-term cash help for small exporters so they can meet wages and bills. Officials are also looking at steps to protect jobs in towns that depend on export factories. Several media reports say the package may follow the model used during the COVID crisis, when the state gave big help to keep firms and jobs afloat.
Schemes and possible shape of the package
Reports say the government may roll out multiple schemes. These steps could cover export credit lines, working-capital loans at low rates, easier insurance and credit-guarantee terms and funds to help exporters switch to new markets quickly. Officials are also likely to fast-track certain approvals and clearances to ease cash flow. The package is still under discussion and may be announced soon.
Export promotion mission: A longer-term push
The government has already announced an Export Promotion Mission in this year’s budget. This mission aims to help exporters move into new markets, improve brand-building, and give more support to small exporters. Officials say the mission and the relief package will work together. The short-term help will protect jobs and cash flow and the mission will build new demand abroad.
Sectors most likely to feel the pain
Textiles and apparel are at the top of the list because the US buys a lot from India. Gems and jewellery also rely heavily on US buyers. Other affected areas include leather and footwear, chemicals, engineering parts and some farm and marine products. Firms in these industries say their margins are small and any big tariff can cut profits or cancel orders.
Focus on liquidity and jobs
Many small exporters face a simple cash problem. When orders slow down, money in the business falls. Companies still need to pay workers, rent and raw materials. The government’s likely plan to give easier credit and faster refunds is meant to stop sudden layoffs and keep small factories running until new buyers are found. Officials reportedly say that the jobs are a top priority.
How GST changes help at home and why they are separate
The government’s recent GST reform, a move to two main tax rates, 5% and 18%, is aimed at lowering costs for Indian buyers and giving relief at home. Those tax changes are not a direct reply to the US tariffs. Still, they free up some money for households and may help domestic demand, which can soften the overall economic hit. The GST changes and the export package are happening at the same time by chance, officials say.
Exporters want quick help on three fronts i. e. cash to run the business, lower borrowing cost and help to find new buyers outside the US. Many also ask for faster refunds of taxes and easier access to export credit schemes. Trade bodies say the government must act fast so orders do not move permanently to other countries.
Talks with the US on tariffs
India and the US are in talks about the tariffs. Commerce Minister Piyush Goyal told AMI that there is no need to ‘panic’ and that negotiations are ongoing. He said India expects a fair and balanced solution. Still, no firm timeline exists for a conclusion. Officials say diplomacy and trade talks will continue while the government gives short-term help to businesses.
Government announcements in the coming days or weeks on one or more schemes for exporters are expected. At the same time, the Export Promotion Mission will work on new markets and longer-term measures. Exporters will watch the US talks closely. If the tariff stays, India will need both short-term relief and long-term changes to keep jobs and trade growing.