Government to offer quick liquidity to tariff-hit exporters

The Government has come up with an “action plan” to respond to the tariff escalation by the U.S., which includes short-, medium-, and long-term measures aimed at not only addressing the short-term pain points, but also increasing long-term competitiveness, the spokesperson of the Ministry of Commerce and Industry told The Hindu. 

According to sources, the short-term measures include providing immediate liquidity and compliance relief to exporters and helping them maintain order levels and employment in vulnerable sectors. 

“The Government of India is proactively responding with a timely, well-calibrated, and comprehensive multi-tiered strategy designed not only to safeguard Indian exporters but also to strengthen our long-term competitiveness in global markets,” the spokesperson said.

“The Department of Commerce has framed a short-medium, and long-term action plan to respond to this tariff escalation,” they added.

“Action plan” to respond to U.S. tariff

According to sources in the Ministry, this action plan is based on a few “guiding principles”: providing immediate relief to exporters with regard to liquidity, compliances, and order levels, building resilience in supply chains, leveraging existing trade agreements, and providing other non-financial assistance to exporters. 

“It is anticipated that exporters may face delayed payments, stretched receivable cycles, and cancelled orders due to the tariff shock,” the source explained. “To prevent working capital stress and protect employment, the government is considering several steps to ease liquidity, prevent insolvencies, and allow exporters to sustain operations until new markets are tapped.”

Major concern for exporters

The Hindu has learnt from various export promotion bodies that the liquidity crunch is a major concern for exporters as they have already bought the stock that they would have exported to the U.S. under normal circumstances. 

“A critical risk is a drop in order levels, particularly in SEZ-based units which contribute significantly to labour-intensive exports,” the source in the Ministry explained. 

They confirmed The Hindu’s August 13 report about the government tweaking the Export Promotion Mission (EPM), announced in the Union Budget 2025, to better align it with the needs of the currently affected export sectors.

That plan is currently being appraised by the Expenditure Finance Committee (EFC). It will include ‘Niryat Protsahan’ or helping exporters with trade finance access such as interest subvention, e-commerce export cards, and collateral support. 

The second pillar would be ‘Niryat Disha’, which would help exporters with market access through export compliance support, branding and packaging support, logistics and warehousing assistance, trade intelligence, and skilling. 

The government is also considering some SEZ policy flexibility norms to help SEZs to sustain production volumes and scale.

The overall plan also includes increasing the resilience of supply chains to prevent future shocks, either in terms of demand or in supply, through measures such as setting up e-commerce export hubs with simplified return logistics, and easier inter-state movement and GST refunds. 

The medium- and long-term strategy includes leveraging the existing Free Trade Agreements that India has signed, an export diversification push so that large shares of exports don’t go to any single country, establishing strategic autonomy is crucial sectors, and creating digital trade infrastructure in the form of the BharatTradeNet (BTN). 

The BTN is envisaged to establish a unified and paperless digital public infrastructure for trade, which can ensure legal recognition of electronic trade documents and digital identities in line with the norms laid out by the United Nations Commission on International Trade Law.