The Union Cabinet led by Prime Minister Narendra Modi on Wednesday approved a key scheme for Indian exporters who have been hit by the punitive Trump tariffs.
Trump tariffs: In a major relief for Indian exporters who have been hit hard by the punitive tariffs imposed by US President Donald Trump, the Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved the expansion of the Rs 20,000 crore credit guarantee scheme for exporters.
Why govt expands credit guarantee scheme for exporters?
Addressing a media briefing after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the Credit Guarantee Scheme for Exporters (CGSE) will provide 100 percent credit guarantee coverage by National Credit Guarantee Trustee Company Ltd (NCGTC) to Member Lending Institutions (MLIs) for extending additional credit facilities up to Rs 20,000 crore to eligible exporters, including MSMEs.
“The scheme shall be implemented by Department of Financial Services (DFS) through NCGTC to provide additional credit support by MLIs to the eligible exporters, including MSMEs,” Vaishnaw said, adding that a management committee formed under the chairmanship of secretary, DFS, will oversee the progress and implementation.
The Minister said the scheme aims to o enhance the global competitiveness of Indian exporters and support diversification into new and emerging markets.
“By enabling collateral-free credit access under CGSE, it will be strengthen liquidity, ensure smooth business operations, reinforce India’s progress towards achieving the USD 1-trillion export target, which will further reinforce India’s journey towards Aatmanirbhar Bharat.”
How exports boost Indian economy?
Notably, exports form a key pillar of the Indian economy, accounting for around 21 percent of the country’s total GDP in 2024-25 and contributing significantly to foreign exchange reserves.
As per official data, export-oriented industries directly and indirectly employ over 45 million people with MSMEs contributing nearly 45 percent of total exports, and experts believe that sustained export growth has been instrumental in supporting India’s current account balance and macroeconomic stability.
Trump tariffs on India
The Modi government’s decision comes US President Donald Trump slapping 50% punitive tariffs on Indian goods as a “punishment” earlier in August, for purchasing Russian oil and weapons. The tariffs came into effect on August 27, 2025.
Trump and his close aides have repeatedly accused New Delhi of “funding” Moscow’s war on Ukraine by purchasing Russian oil, a claim refuted by India, which maintains that its its energy procurement is driven by national interest and market dynamics.
India turned to purchasing Russian oil sold at a discount after Western countries imposed sanctions on Moscow and shunned its supplies over its invasion of Ukraine in February 2022.
(With inputs from agencies)
