India is weighing several policy options to help exporters cope with newly imposed U.S. tariffs of 50% that threaten to erode their competitiveness in export markets. Key sectors hit by the tariff regime—textiles and apparel, leather, shrimp, and some agriculture and manufactured goods—are facing sharp cost disadvantages, particularly after America added secondary tariffs for countries still buying Russian oil.
Amid wide concern among industry bodies, the government is considering a multi-pronged relief package. Measures under discussion include offering subsidised interest rates, providing collateral-free loans, credit guarantees, and possibly reintroducing an “interest equalisation scheme” that previously helped support export competitiveness, especially for small and medium exporters. An earlier version of that scheme used to offset high interest costs in India compared to foreign rivals.
Another demand from exporters is facilitation of procurement opportunities with large domestic buyers such as the Indian Railways and big private retail players, as well as government departments. The idea is that domestic contracts could help offset short-term losses in foreign markets by keeping production active and revenues flowing.
Recent trade data shows that India did manage growth in textile and apparel exports to the U.S. in the first half of the year—even before the tariffs fully took effect—but that growth lagged behind that of competitors such as Vietnam, Bangladesh, Indonesia and Cambodia. These rivals are expected to benefit more under the new trade landscape, putting India at risk of losing market share.
Forecasts paint a bleak picture if the trend continues: analysts believe India’s exports to the U.S. could drop sharply next year from current levels. About two-thirds of India’s U.S. export value is subject to the steep tariffs, pushing effective duties above 60% in some categories.
Departments of commerce and trade are reportedly in intense discussions with industry representatives. All agree that waiting for tariffs to ease on their own is not enough; action must be swift to reduce export cost disadvantage.
Exporters are urging that protective steps be market-agnostic rather than targeted only at the U.S., to avoid triggering retaliatory trade measures. If incentives or subsidies were focused solely on goods sent to the U.S., Washington could respond with countervailing duties.
The stakes are high: the U.S. absorbs about a fifth of India’s merchandise exports. A sustained loss in export volumes could affect local jobs, MSMEs, regional economies, and reduce India’s footing in global supply chains.