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10-09-2025
Bureau Report
NEW DELHI: India will roll out a package of measures to help exporters hurt by a surge in US tariffs, Finance Minister Nirmala Sitharaman said on Friday.
The new US duties slapped on Indian goods last month included a 25% punitive levy over New Delhi’s Russian oil purchases, taking overall duties as high as 50% on a wide range of items from garments and jewelry to footwear and chemicals.
“Government will come out with something to handhold those who have been hit by 50% tariffs,” Sitharaman told media, without going into further detail.
The government plans to offer credit guarantees on loans overdue by up to 90 days for small businesses and exporters, media reported earlier, citing government sources.
Exporters said labor-intensive sectors such as textiles, jewelry and seafood, particularly shrimp which all operate on margins of just 3%-5% have been hit hardest, causing job losses in industrial hubs in Tamil Nadu and Prime Minister Narendra Modi’s home state of Gujarat.
“Textiles and apparel manufacturers in Tiruppur, Noida and Surat have halted production amid worsening cost competitiveness,” S.C. Ralhan, President of the Federation of Indian Export Organizations (FIEO), said.
The tariffs, among the highest imposed by the administration of US President Donald Trump, delivered a serious blow to ties between the two powerful democracies that had in recent decades become strategic partners.
Nearly 55% of Indian exports to the US, worth about $48 billion, now face a cost disadvantage against rivals from Vietnam, China and Bangladesh, Ralhan said last week ahead of an exporters’ meeting with the finance minister.
Thousands of workers have already been laid off, exporters have said.
India is planning to provide credit guarantees for loans overdue up to 90 days to small businesses and exporters, amid higher tariffs imposed by the US, two government sources told media.
The federal finance ministry has proposed to provide 10%-15% credit guarantees to banks for advancing loans to stressed small businesses, with turnover up to 5 billion rupees that fall under the Reserve Bank of India’s (RBI) so-called special mention accounts (SMA), the sources said.
Loans that have not been repaid for 0-90 days fall under RBI’s SMA 0-2 category, but are not classified as non-performing assets.
India’s small businesses still struggle with limited access to timely and adequate formal credit.
The government will allocate about 40 billion rupees for providing guarantees to banks, both sources said.
The scheme is designed for firms that are stressed due to external factors “beyond their control”, and the eligibility criteria are being firmed up, according to the sources.
The criteria will cover small exporters who are currently facing uncertainties due to higher tariffs imposed by the US, a key market for Indian exports, the second source said.
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.
The finance ministry did not immediately respond to an email seeking comment.
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 70%-75%, the second source said. The scheme was announced by India’s finance minister in the budget for fiscal 2026.
