India has approved a $5.1 billion relief package to support exporters reeling from the impact of steep US tariffs, according to Information Minister Ashwini Vaishnaw. The cabinet cleared the plan, which includes $2.8 billion in funding over six years for export promotion initiatives and $2.3 billion in credit guarantees to back collateral-free loans until March 2026.
The program aims to help small and medium exporters access affordable trade finance, strengthen logistics, and explore new global markets. The move comes as India and the United States edge closer to finalizing a trade agreement that could ease some of the recent tariff pressures.
Washington recently imposed new tariffs of up to 50% on select Indian goods, including garments, jewelry, leather products, and chemicals. The hikes were partly in response to India’s continued imports of Russian oil. Export-dependent sectors such as textiles, jewelry, and seafood — especially shrimp — have been among the hardest hit, with many firms operating on narrow profit margins of just 3% to 5%. These industries are now reporting rising job losses in key manufacturing regions such as Tamil Nadu and Gujarat, Prime Minister Narendra Modi’s home state.
Under the new package, exporters will receive government-backed credit guarantees on loans of up to $5.7 million to help them remain competitive and secure new buyers abroad. The initiative also seeks to improve trade infrastructure and reduce logistical costs, both major obstacles to global competitiveness for Indian producers.
Nearly 55% of India’s exports to the United States — valued at around $48 billion — now face a cost disadvantage compared to goods from Vietnam, China, and Bangladesh, said S.C. Ralhan, president of the Federation of Indian Export Organisations. India’s merchandise exports to the US, its largest market, dropped nearly 12% in September to $5.43 billion after the higher tariffs came into effect in late August, with engineering exports alone falling by 10%.
US President Donald Trump recently hinted that a new economic and security deal with India is near completion, a move that New Delhi hopes could pave the way for tariff reductions and renewed trade momentum.
