India approves $5.1 billion package for exporters after US tariffs hit
Nov 12 (Reuters) - India's cabinet has approved spending 450.6 billion rupees ($5.1 billion) on support for exporters, including 200 billion rupees in credit guarantees on bank loans, Information Minister Ashwini Vaishnaw said on Wednesday.
The plan includes the allocation of 250.6 billion rupees over six years for affordable trade finance for small exporters, logistics and market support under an export promotion package to help offset the impact of recent U.S. tariff hikes.
The new U.S. tariffs, including a 25% punitive levy over New Delhi's Russian oil purchases, raised duties to as high as 50% on items such as garments, jewellery, leather goods and chemicals.
Exporters said labour-intensive sectors such as textiles, jewellery 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.
The plan includes a 200-billion-rupee credit guarantee programme running until March 2026 for collateral-free bank loans to exporters to boost their competitiveness and help explore new markets, Vaishnav said.
It would provide credit guarantees on loans of up to 500 million rupees, he said.
Nearly 55% of India's exports to the U.S., worth about $48 billion, faced a cost disadvantage against rivals from Vietnam, China and Bangladesh, Federation of Indian Export Organisations President S.C. Ralhan told the government, while seeking support.
India's merchandise exports to the U.S., its largest market, fell nearly 12% year-on-year to $5.43 billion in September, after the 50% tariffs took effect in late August, with engineering goods shipments down about 10%.
On Monday, Trump said Washington was close to a deal with India to expand economic and security ties, an agreement New Delhi hopes could lead to an initial cut in punitive tariffs.
