India announced a $5.4 billion export support package aiming to protect its domestic industry in the wake of steep US tariffs. The approval signals a significant effort by the Modi government to shore up India’s global trade position while ensuring exporters remain resilient.
The new initiatives will be pivotal as exporters face up to a 50 percent tariff on goods entering the US market, introduced in late August.
The push not only targets immediate relief but also sets the stage for India’s longer-term export growth.
What Led to India's $5.4 Billion Export Intervention?
The intervention follows a period of mounting trade tensions between Washington and New Delhi. In August, the United States imposed a 50 percent tariff on a range of Indian exports, mainly citing India’s significant purchases of Russian oil.
Business groups warned that the new trade barriers risked hurting India’s export performance and impacting vulnerable sectors dependent on the US market.
The decision to act stems from feedback collected by multiple ministries and export organizations.
Industry associations pointed to early signs of slowing shipments, especially in textiles, gems, and engineering goods.
The government designed the package as a dual intervention to deliver a quick infusion of credit support and strategic long-term promotion initiatives.
Did you know?
India ranks among the top five global exporters of cut and polished diamonds, largely driven by MSMEs without access to major international finance lines.
How Does the Export Promotion Mission Work?
India’s Export Promotion Mission features two long-term sub-schemes: Niryat Protsahan and Niryat Disha. Niryat Protsahan aims to increase access to affordable trade finance for small and medium enterprises and e-commerce exporters by leveraging interest subventions, factoring, collateral guarantees, and special credit cards. Its allocation totals ₹10,401 crore across six years.
Meanwhile, Niryat Disha allocates ₹14,659 crore to empower exporters through brand support, packaging assistance, trade fair participation, warehousing, logistics upgrades, and trade intelligence programs.
Together, these initiatives consolidate previously fragmented policies, focusing resources where the impact of tariffs is most severe.
What Support Will Exporters Receive Under the Credit Guarantee Scheme?
The expanded Credit Guarantee Scheme promises 100 percent coverage for lending institutions underwriting new, collateral-free loans for export-focused businesses.
By engaging the National Credit Guarantee Trustee Company Limited, the scheme allows banks and NBFCs to extend credit to exporters without additional risk burdens.
Oversight is ensured by a management committee chaired by the Secretary of the Department of Financial Services.
By providing a robust risk-sharing ecosystem, this initiative is expected to unlock credit for thousands of micro, small, and medium enterprises who might otherwise struggle to obtain working capital in a turbulent export environment.
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Which Sectors Are Set to Benefit Most?
The government's priority list targets industries that suffered significant setbacks following the US tariff escalation. Textiles, leather, gems and jewellery, engineering goods, and marine products feature prominently, given their export volumes and employment bases.
For instance, the textile industry, which accounts for millions of jobs, relies heavily on the US as a destination for finished garments and fabrics.
By channeling funding and support to these exposed sectors, the package aims to maintain production levels and safeguard labor.
Participation in global trade fairs and warehousing support is expected to help exporters diversify markets and brands, reducing over-reliance on any single country, such as the US.
Will the Package Accelerate India’s $1 Trillion Export Ambition?
Government officials emphasize that the $5.4 billion investment is part of a holistic push to achieve the ambitious $1 trillion export target for the current fiscal year.
The export promotion measures are crafted to provide both immediate cushioning against tariff shocks and to help Indian firms climb up the value chain in global markets.
While exporters and industry leaders praise the scale and scope of the intervention, experts caution that global market dynamics remain unpredictable.
The impact of sustained US tariffs, changing global demand, and India's ability to adapt to shifting supply chains will ultimately determine the pace of progress.
Looking ahead, India’s bold response to steep US tariffs might inspire confidence among exporters and international investors, yet the global trade outlook remains uncertain.
The success of these initiatives will depend on swift implementation, ongoing policy adjustments, and persistent engagement with India’s trading partners.
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