SYLLABUSGS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context: Recently, the Union Cabinet launched a six-year Export Promotion Mission from FY 2025-26 to FY 2030-31 to counter the impact of steep US tariffs and support MSME exporters.
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- The mission aims to help exporters manage the impact of the 50 percent tariff imposed by the United States on Indian goods starting August 27.
- The mission will prioritise sectors that are under stress due to global tariff escalation such as textiles, leather, gems and jewellery, engineering goods and marine products.
- The mission will be implemented through Niryat Protsahan and Niryat Disha, which together will strengthen financial and non-financial support systems.
- The Directorate General of Foreign Trade will implement the mission through a digital platform that integrates application and disbursal processes.
- The mission consolidates existing export support schemes, including the Interest Equalisation Scheme and the Market Access Initiative, to create a unified export promotion framework.
- The Cabinet also cleared additional credit facilities of up to ₹20,000 crore under the Credit Guarantee Scheme for Exporters to support liquidity for Micro, Small, and Medium Enterprises (MSMEs).
Impact of US Tariffs on Indian Exports to the US
- Exports to the United States dropped nearly 40% over the past four months, reflecting sustained pressure on India’s largest export market.
- Labour-intensive sectors such as textiles, gems and jewellery, engineering goods, and chemicals suffered the highest losses due to higher tariff burdens.
- Textile and apparel exports to the United States also contracted by more than 10 percent during September, according to industry assessments.
- The decline in shipments contributed to India’s trade deficit widening to a 13-month high of $32.15 billion in September.
- India’s losses in the US market were partly offset by improved trade flows with UAE and China, though not enough to reverse the decline.
- The tariff shock made the US India’s most severely affected export destination, according to the Global Trade Research Initiative.
Significance of the Export Promotion Mission
- The mission strengthens India’s export ecosystem by integrating financial and non-financial support into a single, digitally driven framework.
- It enhances MSME competitiveness by improving access to affordable trade finance and reducing compliance-related costs.
- It helps safeguard employment and export orders in sectors affected by global tariff escalations such as textiles, leather, engineering goods and marine products.
- It addresses structural challenges like high logistics costs, weak export branding and fragmented market access, enabling long-term export resilience.