Winning Bizness Desk
Mumbai. The Reserve Bank of India is weighing new ways to support Indian exporters facing pressure from steep US tariffs, after its earlier loan repayment relief scheme saw limited participation. Sectors ranging from textiles and gems and jewellery to leather goods and chemicals have been hit hard by the 50 percent tariff imposed by the United States. With exporters still struggling to adjust to higher costs and thinner margins, the central bank is reassessing how best to cushion the impact without disrupting the broader credit system.
Background of tariffs and policy response
US President Donald Trump warned earlier this week that tariffs could be raised further if India does not curb its imports of Russian oil. After the US imposed higher duties last year, both the RBI and the government rolled out relief measures. In November, the RBI allowed banks to offer a moratorium on term loan repayments falling due between September 1 and December 31 for exporters doing business with the US. However, only a small number of eligible exporters opted for the facility, prompting a rethink.
Why loan moratorium saw limited response
Bankers say strict eligibility conditions discouraged companies from applying. According to a senior official at a state-owned bank, exporters were required to submit clear proof of revenue loss, which many firms could not compile by December. As a result, the response to the repayment freeze remained muted. With this feedback, the RBI is now considering alternatives, including relaxing eligibility norms or allowing fresh loans at concessional interest rates to provide more direct support.
Options under consideration for exporter relief
The central bank and lenders are discussing several possible measures to improve uptake and effectiveness. These include:
- Easing documentation requirements for loan relief
- Extending eligibility beyond narrowly defined loss periods
- Permitting new low-interest working capital loans
- Exploring mechanisms that reduce immediate cash stress
- Whether new US orders revive or slow further
- The sustainability of operating at reduced margins
- The impact of any additional tariff hikes
Midway through these deliberations, bankers have conveyed to the government that direct cash subsidies may be more effective than loan restructuring. Such support could help offset business losses or declines in export margins more quickly, especially for smaller exporters with limited financial buffers.
Export trends and ongoing consultations
The RBI and banks are holding talks with export promotion agencies to assess fresh order flows in the new year before finalising any package. Until November, India’s exports to the US remained largely stable. This was because many exporters had locked in orders before tariffs took effect, while others chose to ship goods at lower margins to avoid losing customers altogether.
Looking ahead, exporters remain cautious. Key concerns being tracked include:
The central bank is expected to calibrate its response based on these signals, aiming to balance targeted relief for exporters with overall financial stability.
