US tariff blow: Govt finalising support package for exporters to address liquidity crunch
FILE PHOTO: Indian flag, 3D-printed miniature model depicting U.S. President Donald Trump and the word “Tariffs”, are seen in this illustration taken August 27, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
| Photo Credit:
Dado Ruvic
The government is considering support measures for exporters which include speedy roll out of the long-promised export promotion mission and a possible restoration of popular old schemes. This is expected to help them address liquidity constraints as the latest averments from US officials suggest no immediate solution to the tariff crisis triggered with the doubling of import levies to 50 per cent this week, sources said.
White House Advisor Peter Navarro said on Wednesday in an interview that the additional 25 per cent duties (imposed over and above the 25 per cent reciprocal tariffs imposed on August 7) could be reversed if India stopped buying oil from Russia, a suggestion that India has consistently turned down. Navarro let out a barrage against India, stating: “Instead of siding with democracies, you are getting in bed with authoritarians. You have been in a quiet war with China for decades. China invaded Aksai Chin and all your territory. They are not your friends. And Russian? Come on!”
White House trade advisor Peter Navarro
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US National Economic Council Director Kevin Hassett, in a separate interview, said the negotiations could remain stuck because, “If the Indians don’t budge, I don’t think President (Donald) Trump will“.
Liquidity issues
In this backdrop, exporters have been apprising the government of liquidity issues and other problems they are facing while dealing with US tariffs, that now stand at 50 per cent. “Positive work is going on to help them,” an official told businessline.
All proposals made by exporters to help address their credit woes, such as restoration of the interest equalisation scheme and introduction of credit guarantee schemes, are being examined by the RBI, the official said.
Brazil, the only other country to be hit by 50 per cent tariffs on many of its products, has already announced a $5.6 billion `Sovereign Brazil Plan’. This plan includes multiple elements such as an export guarantee fund for credit with accessible rates, finance lines for exports, suspension of taxes for exporting companies et al.
“The export promotion mission, announced by Finance Minister Nirmala Sitharaman in her Budget speech earlier this year with annual allocation of ₹2,240 crore ($255.62 million), will provide support such as easy credit and marketing and warehousing assistance for a longer period of five years. But the government is also considering schemes for a shorter duration targeted at exports to the US,” an industry source said.
Subsidised credit
There is a strong demand from the industry for a temporary restoration of the Merchandise Export from India Scheme (MEIS) in a slightly tweaked format to make it compliant with international rules. Under the scheme, various sectors were provided duty free scrips equivalent to a certain percentage value of the exports. “The government can decide on an appropriate value of support under the scheme, and it can be provided for a few months. Similarly, the government can continue the interest subvention scheme which provides subsidised credit to the industry,” the source added.
Some exporters have made a case for government support up to 15 per cent of the export value. “The logic behind 15 per cent is that the government should take up half the burden of the 30 per cent additional tariffs that Indian exporters suffer vis-a-vis their competitors. Countries such as Vietnam, Indonesia, Bangladesh and the Philippines face 20 per cent tariffs in the US,” the source pointed out.
“Instead of siding with democracies, you are getting in bed with authoritarians.”Peter Navarro White House Advisor
Published on August 28, 2025
