India planning financial aid for exporters hit by US tariffs
What's the story
The Indian government is working on a financial assistance plan for businesses and exporters struggling with the impact of high tariffs. According to Reuters, the proposed scheme would involve credit guarantees for loans overdue by up to 90 days. The initiative mainly targets small businesses and exporters under the Reserve Bank of India (RBI)'s Special Mention Accounts (SMA) category.
Financial support
Credit guarantees to banks for extending loans
The government plans to provide 10-15% credit guarantees to banks for extending loans to stressed small businesses. These businesses fall under the RBI's SMA category, where loans are not classified as non-performing assets if unpaid within a 90-day deadline. The government has set aside around ₹40 billion for these bank guarantees, according to Reuters.
Support conditions
Eligibility criteria still being finalized
The proposed scheme is aimed at firms stressed by external factors beyond their control. The eligibility criteria are still being finalized, but would cover small exporters facing uncertainties due to higher US tariffs. The government estimates that around 55% of its merchandise exports to the US will be affected by the tariff imposed by President Donald Trump's administration.
Exporter support
Term loans for small exporters
In addition to the credit guarantees, the government is also working on a scheme to provide term loans for small exporters. These loans would be backed by a government guarantee of up to 70-75%. This initiative is part of the broader effort to support businesses affected by external factors such as high tariffs.