India's government plans relief measures for exporters amidst 50% US tariffs

The government is working on short-, medium- and long-term plans to help exporters cope with the steep 50% tariffs on Indian goods entering the US, with easing of the special economic zone (SEZ) norms also under consideration, an official said.

The idea is to provide immediate liquidity relief to exporters, help maintain order levels and employment in vulnerable sectors, build resilient supply chains through structural reforms, and increase market access by leveraging existing trade pacts and tapping new markets. Officials said a well-calibrated, multi-tiered strategy is being designed not only to safeguard Indian exporters but also to strengthen India’s long-term competitiveness in global markets. The government is also operationalising ecommerce export hubs with simplified return logistics, easier interstate movement and faster GST refunds.

Third-party facilitators will be allowed to manage compliance and logistics for e-commerce exports under a new inventory model. According to the official cited above, “This would ease the burden on MSMEs and enable them to focus on quality and branding.”

The relief measures come after the US imposed 50% tariffs on Indian goods from August 27. This is expected to hit around $48.2 billion worth of goods exports, or over 55% of India’s total shipments to the US. Exporters may see delayed payments, stretched receivable cycles, and cancelled orders due to the tariff hit.

To prevent working-capital stress and protect jobs, the government is considering several steps. Non-financial support being discussed includes branding initiatives, reducing compliance requirements, and measures to bring down logistics costs.

“While exports are critical, India remains a domestically anchored economy, with merchandise exports at $438 billion accounting for a moderate 10.4% share of GDP ($4.12 trillion), and with limited value addition in some sectors,” the official said.

While the US accounts for about 18-20% of India’s overall merchandise exports, some sub-sectors are highly dependent on the US. For example, 60% of carpet exports, 50% of made-ups, 30% of gems and jewellery, and 40% of apparel exports go to the US.