The Government of India is actively preparing a robust ‘action plan’ to assist exporters grappling with unprecedented liquidity constraints triggered by recent 50% tariffs imposed by a major trading partner. The multifaceted plan aims to alleviate immediate financial pressures, preserve order books, and reinforce the resilience of India’s export ecosystem, thereby safeguarding livelihoods and sustaining export momentum during turbulent global trade dynamics.
Key Highlights of the Government’s Export Support Strategy
Recognizing delayed payments, extended receivable cycles, and order cancellations as immediate stress points, the government plans Covid-style liquidity relief schemes tailored to exporters’ unique needs.
The proposed short-term measures will facilitate working capital relief through collateral-free loans, credit guarantees, and emergency credit facilities, mitigating insolvency risks particularly for MSMEs.
A phased, multi-tiered approach is envisioned, encompassing immediate liquidity infusion, targeting vulnerable sectors, medium-term market diversification, and structural reforms to build long-term export competitiveness.
Non-financial support components include enhancing market access via trade agreements, branding initiatives, export compliance facilitation, and capacity-building programs for exporters.
Simplification and rationalization of Goods and Services Tax (GST) rates, coupled with GST reforms (termed GST 2.0), are under active consideration to reduce tax burdens and ease exporters’ compliance obligations.
The government is also exploring the operationalization of integrated e-commerce export hubs and streamlining inter-state movement and export returns to boost cross-border trade efficiency.
Learning from the Emergency Credit Line Guarantee Scheme (ECLGS) during the Covid pandemic—credited with saving millions of MSMEs—the government aims to adapt and expand such frameworks with new parameters suited for the current crisis.
Stakeholder consultations with financial institutions, industry bodies, and trade chambers are ongoing to fine-tune the scheme details, ensuring swift implementation and widespread reach.
While short-term relief is critical, medium and long-term strategies include leveraging free trade agreements, enhancing supply chain resilience, and encouraging participation in alternative international markets to reduce export concentration risks.
The plan also contemplates legal and policy support to boost Special Economic Zones (SEZs), promote export-oriented units, and facilitate smooth credit flows for scale-up and modernization projects.
Economic Context and Urgency
The tariffs, part of broader geopolitical trade tensions, have disrupted global supply chains, and India’s exporters have faced cascading challenges—from cash-flow bottlenecks to shrinking overseas demand.
India’s merchandise exports touched record highs recently but face risks due to tariff hikes on key export items, making government intervention essential to preserve competitiveness.
Export sectors critical for employment generation, such as textiles, leather, gems and jewelry, and engineering goods, are focal points for support measures.
Efforts to sustain order levels also seek to avert downstream disruptions in manufacturing, logistics, and allied service sectors.
Government’s Vision for Resilient Export Ecosystem
The coordinated policy response aims to maintain India’s export growth trajectory amidst external headwinds, supporting the country’s $1 trillion export target vision.
By integrating financial relief with structural reforms, the government is aiming to pivot India’s export economy towards higher value-addition, innovation, and diversification.
Measures to facilitate export finance, improve ease of doing business, and foster innovation ecosystems focus on creating sustainable export capabilities.
The government’s ongoing emphasis on technology adoption, digital marketplaces, and market intelligence platforms complements the financial interventions.
Indian exporters are encouraged to leverage India’s network of trade agreements to tap into emerging markets and reduce over-dependence on tariff-hit regions.
Conclusion
With a comprehensive, phased ‘action plan’ in the pipeline, the Indian government signals its firm commitment to bolster the export sector in this challenging global trade environment. By addressing immediate liquidity crunches, preserving order flow, and laying foundations for long-term resilience, the plan aims to protect millions of livelihoods and propel India toward its ambitious export growth goals—ensuring the country remains a trusted and competitive player in global commerce.
Sources: Hindustan Times, Taxman, Economic Times, Ministry of Commerce and Industry
