India Launches $5 Billion Support Plan to Offset Impact of US Tariffs

India has announced a major $5 billion economic support package, representing the government's latest effort to shield exporters from the growing impact of harsh US tariffs. This is coming as Washington imposes steep duties against New Delhi's continued purchase of Russian oil, tying geopolitical tensions directly to trade relations.

Prime Minister Narendra Modi said the government has cleared the ambitious Export Promotion Mission, valued at close to $3 billion. It will be implemented over a five-year period extending up to fiscal 2030–31 and will integrate earlier export schemes into a single framework. The idea is to enhance global competitiveness by enabling small manufacturers to access cheaper trade finance and upgrade to global quality standards, officials said.

According to the Ministry of Commerce, "priority support will be extended to sectors facing pressure due to global tariff escalations," signaling urgent relief for industries most affected by recent trade disruptions.

Additional $2.3 Billion Credit Guarantee for Exporters

To boost the export segment further, Information Minister Ashwini Vaishnaw declared a $2.3 billion credit guarantee scheme for exporters to ease financial risks in volatile global markets. Ashwini Vaishnaw pointedly mentioned that the current policies of some countries have created turbulent conditions for Indian business, so the support by the government becomes literally indispensable.

The cumulative efforts will mainly help the employment-intensive and export-oriented sectors like textiles, leather, engineered goods, gems and jewellery, and marine exports that are heavily dependent on foreign demand.

Economic Growth Strong but Risks Rising

India's economy, which is the fifth-largest in the world, posted its fastest expansion in five quarters during the April to June period, buoyed by higher government spending and rising consumer confidence.

But analysts caution that continued U.S. tariffs will put the brakes on that momentum. Estimates are that India's GDP growth may slide by 60 to 80 basis points this fiscal year, assuming the tariff-related restrictions are not negotiated.

Ongoing Trade Negotiations with the United States

Despite tensions, both the US and India continue to engage in discussions aimed at resolving significant disagreements on trade. Controversy surrounds agricultural market access and claims by Washington of indirect support for the war in Ukraine via Indian purchases of Russian oil. Indian officials hope the newly announced support measures will help exporters stay competitive while diplomatic efforts continue.