Govt Rolls Out Multi-Tiered Support to Help Exporters Weather US Tariff

Image Source: Free Press Journal

In response to the steep 50 percent tariffs imposed by the United States on Indian goods, the Government of India has launched a multi-tiered relief strategy aimed at safeguarding exporters, preserving jobs, and maintaining production continuity. The measures, announced between August 28 and 30, 2025, are designed to address both immediate liquidity concerns and long-term competitiveness across key sectors such as textiles, apparel, leather, and technical goods.

Here’s a comprehensive breakdown of the relief package and its implications.

1. Immediate Relief Measures

- Liquidity support is being prioritized to help exporters manage delayed payments and stretched receivable cycles caused by the tariff shock
- The government is considering interest subvention schemes, collateral-free credit lines, and factoring support to ease working capital stress
- Exporters operating in Special Economic Zones (SEZs) will be granted greater operational flexibility, including relaxed compliance timelines and inventory movement norms
- Branding and packaging assistance is being extended to help exporters reposition their products in alternate markets

2. Sector-Specific Interventions

- The Directorate General of Foreign Trade (DGFT) has extended the Export Obligation (EO) period under the Advance Authorisation scheme from six months to 18 months for products regulated by Quality Control Orders
- This move benefits man-made fibre and technical textile exporters, offering them more time to fulfill commitments without penalty
- Cotton import duties have been waived until December 31, 2025, ensuring raw material availability and reducing input costs for textile manufacturers
- These steps are expected to stabilize production cycles and prevent disruptions in export supply chains

3. Market Diversification Strategy

- A 40-nation outreach initiative has been launched to help exporters tap into new markets across Europe, East Asia, and Latin America
- Indian Missions abroad are actively engaging with buyers and trade bodies to facilitate entry into markets such as Italy, Germany, Japan, South Korea, and the UK
- E-commerce export hubs are being operationalized to simplify logistics, enable faster GST refunds, and reduce compliance burdens for MSMEs
- Third-party facilitators will be allowed to manage inventory and shipping for small exporters, freeing them to focus on product quality and branding

4. Domestic Demand Boost

- The GST Council is expected to meet in early September to consider reducing tax slabs and shifting more goods into lower brackets
- This move aims to stimulate domestic consumption, offering exporters an alternate sales channel while global trade recalibrates
- The government is also exploring structural reforms to improve supply chain resilience and reduce logistics costs

5. Regional Impact and Political Response

- Tamil Nadu’s Tiruppur textile hub has been particularly hard-hit, with Chief Minister MK Stalin urging the Centre for a special financial package
- Noida’s apparel exporters have reported order cancellations and deep discounting pressures, with small-scale units facing potential shutdowns
- Industry leaders warn that lakhs of jobs are at risk if immediate support is not translated into actionable disbursements

6. Long-Term Vision

- The government is committed to building a diversified and globally competitive export base
- Future plans include leveraging free trade agreements, enhancing technical standards, and investing in export-oriented infrastructure
- While India remains a domestically anchored economy, merchandise exports worth $438 billion in FY25 accounted for over 10 percent of GDP, underscoring the strategic importance of trade

The relief measures reflect a calibrated response to a sudden external shock, balancing short-term cushioning with long-term transformation. As exporters brace for a turbulent season, the government’s proactive stance offers a lifeline—and a roadmap for resilience.

Sources: The Hindu Business Line, Business Standard, Economic Times, GoodReturns, Deccan Herald