India has introduced a $5 billion plan to enhance its export competitiveness in response to the economic pressure exerted by the United States’ tariffs. The move comes as the country faces 50% duties imposed by Washington, reportedly in retaliation for India’s continued purchase of Russian oil amidst the ongoing conflict in Ukraine.
Prime Minister Narendra Modi announced the approval of an “Export Promotion Mission (EPM)” aimed at improving export competitiveness. This nearly $3 billion program, set to run until 2030-31, will replace several existing schemes with a unified framework designed to assist small manufacturers in accessing affordable trade finance and meeting global quality standards.
According to a statement from the Ministry of Commerce, priority support will be extended to sectors affected by recent global tariff escalations. The mission is intended to address structural challenges that hinder Indian exports. Additionally, Minister of Information Ashwini Vaishnaw announced a $2.3 billion credit guarantee scheme for exporters, citing the need for such measures in the current global environment where some countries’ policies are causing hardship for others.
The efforts are targeted at boosting exports of labor-intensive goods, including textiles, leather, gems, and jewelry, as well as engineering and marine products. India’s economy, which is the fifth-largest in the world, experienced its fastest growth in five quarters in the period ending June 30, driven by increased government spending and improved consumer sentiment.
However, US tariffs continue to pose a significant challenge, with experts predicting they could reduce India’s GDP growth by 60 to 80 basis points this fiscal year if no relief is provided. Despite ongoing deal negotiations, both India and the United States remain at odds over agricultural trade and the issue of Indian purchases of Russian oil, which US officials claim are fueling the war in Ukraine.
The introduction of the $5 billion plan is a strategic move by India to mitigate the impact of US tariffs and enhance its export competitiveness in the global market. As the country navigates these economic challenges, the success of the Export Promotion Mission will be crucial in supporting Indian exporters and contributing to the nation’s economic growth.