Tailor-made measures for key export sectors likely

The government is considering specific industry-wise measures rather than a full-scale loan guarantee scheme to help export-oriented units and small and medium enterprises facing stress on account of the US tariffs, said officials.

It comes after exporters sought an emergency credit line guarantee scheme (ECLGS) that would offer collateral-free working capital and government-backed risk cover to tide over the punitive tariffs on Indian exports. "There have been cases where smaller firms, like in the textile sector, are not able to fully benefit from overarching schemes. That is why we are looking at targeted measures like sector-specific credit lines with relaxed collateral," said one of the officials, who did not wish to be identified.

Other measures being discussed include integrating lending infrastructure with the PM Vishwakarma scheme and BharatNet project.

Under the PM Vishwakarma scheme, collateral-free credit and skill training are provided to artisans and craftspeople, along with other support measures.

BharatNet is one of the world's largest rural telecom projects, under which high-speed broadband connectivity is provided to gram panchayats across the country.

"We are also exploring with banks and insurers the possibility of setting up cluster-based working capital funds and bringing down insurance premiums," said the official.

These measures are crucial given the uncertainty over the proposed bilateral trade agreement (BTA) talks. American trade negotiators have postponed their visit to Delhi for the sixth round of discussions, which were scheduled for August 25-29, even as the two sides had earlier said that they were aiming to conclude the first tranche of the BTA by autumn.

Meanwhile, the Federation of Indian Export Organisations (FIEO) has pushed for credit support, risk mitigation and cost relief to navigate disruptions expected from the steep 50% tariffs announced by the US. It has also suggested a moratorium on loan payments for one year, as high tariffs could result in reduced orders or longer payment cycles, squeezing exporter cash flows.

While the 25% tariff on Indian goods entering the US came into effect on August 7, the additional 25%, announced as a penalty for buying crude oil and military equipment from Russia, will kick in on August 27.

India's exports to the US in April-July amounted to $33.53 billion, up 17.8% from $27.57 billion a year ago.

The US remains India's largest trading partner, and the commerce and industry ministry is in touch with exporters and export promotion councils to assess the impact of the 25% tariff already in effect.

The FIEO has suggested lowering the insurance premium to make it more accessible to small and medium exporters. It has also pushed for automatic enhancement of credit limits up to 30%, as exporters may need higher working capital to stay competitive against global rivals.