India Plans $2.55 Billion Exporter Relief Amid US Tariffs

India is planning to provide relief measures to its exporters who have been affected by the tariffs imposed by the Trump administration. The Indian cabinet is set to consider a proposal that offers extensive support to exporters, as the country braces for an uncertain future with its largest export destination.

The proposal, put forth by the Indian Ministry of Commerce and Industry, includes measures such as interest-free loans and subsidized interest rates to ease the liquidity pressures faced by exporters. This plan is expected to be discussed during a cabinet meeting scheduled for Wednesday or in the coming days.

The funding for these relief measures is anticipated to come from the 225 billion rupees (approximately 2.55 billion USD) allocated for exports in the federal budget presented in February. At that time, Indo-U.S. relations were amicable, and New Delhi did not foresee significant impacts. However, the relationship between the two nations has deteriorated rapidly in recent months, leading to the imposition of a 50% tariff by the White House on Indian goods in August. This tariff was a response to India's trade barriers and its purchase of oil from Russia.

India now faces the highest tariffs in Asia, making its products less competitive compared to those from manufacturing rivals like Vietnam and Bangladesh. The United States is India's largest export market, and these tariffs are expected to have the most significant impact on labor-intensive industries such as textiles and jewelry.

Despite the current tensions, there are signs that the relationship between the two countries may thaw. Recent commitments from both nations' leaders indicate a willingness to resume trade negotiations.

Previously, there were discussions about increasing the federal budget allocation, but these negotiations are still in the early stages. In the previous month, it was reported that the government plans to invest approximately 250 billion rupees over the next six years to support exporters.