Commerce ministry readies export incentives, credit aid to blunt Trump tariffs
According to a top government official, the commerce ministry has finalized the proposal and sent it to the finance ministry for consideration.
The package is designed to give exporters a combination of incentives, policy support and targeted interventions to help them overcome the volatility in global trade.
'We have sent the proposal to the finance ministry, and it is now awaiting clearance from the Expenditure Finance Committee (EFC) before being placed before the Union cabinet for approval,' the official said on the sidelines of the inauguration of the new building of Intellectual Property Office on Wednesday.
The package has been designed to address both immediate operational challenges faced by exporters and medium-term policy hurdles, with a particular emphasis on high-potential sectors that can yield quick gains in overseas shipments, the official added, requesting not to be identified.
Mint reported on 8 August that India is preparing to counter stiff US tariffs by pivoting to new markets and offering incentives for exporters, even as prime minister Narendra Modi has vowed to protect the interests of the country's farmers and fishermen.
Trump has imposed an additional 25% tariff to punish India for buying Russian oil and weapons, doubling the duty on New Delhi's shipments to Washington to 50%
Alongside efforts to secure fresh trading destinations, the government's proposed financial package under the Export Promotion Mission is expected to include raising the duty drawback rate from 1% to as high as 5% to help exporters offset the additional tax burden, and reintroducing the interest equalization scheme (IES), which offers exporters a subsidy on interest rates to lower borrowing costs. These initiatives would be funded through a new ₹ 20,000 crore corpus.
Duty drawback refers to the refund of duties collected upon import of goods.
Finance minister Nirmala Sitharaman announced the Export Promotion Mission in the FY26 budget to facilitate easy access to export credit, and help small businesses overcome non-tariff measures in foreign markets, among others.
The measures are aimed at cushioning the economy against the potential fallout of the US tariff hike, which some economists warn could trim India's growth by 20 to 30 basis points, bringing it down to around 6.2% in the current fiscal year.
The move is being initiated to mitigate the impact of the US tariffs. However, the government is continuing to pursue dialogue to resolve the matter, and no retaliatory measures are currently being considered.
Meanwhile, while inaugurating the new building of the Intellectual Property Office, Union minister for commerce and industry Piyush Goyal said that provisions related to intellectual property laws in the country have been simplified to further improve ease of doing business.
Keeping in mind the goal of a developed India, suggestions have been invited from all stakeholders to make the IP ecosystem more effective in order to further strengthen the Atmanirbhar Bharat campaign, Goyal added.
'The government will take similar steps for laws related to IPR (intellectual property rights), trademarks, and copyrights, in line with the approach taken under the Jan Vishwas Bill to decriminalize business laws. Suggestions will be sought from stakeholders for this process, and if necessary, a completely new legislation may be introduced,' Goyal said.
The US tariffs threaten to disrupt trade flows between the two countries, which totalled $86.5 billion in Indian goods exported to the US in the last fiscal year. Sectors like textiles, engineering goods, marine products and gems and jewellery are particularly vulnerable and could see exports fall by as much as 40% if the tariffs persist, according to analysts.
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