In a significant move to ease the mounting pressure on Indian exporters, the Reserve Bank of India (RBI) has rolled out a comprehensive relief package aimed at addressing the financial strain caused by the United States’ sudden decision to impose a 50% tariff on Indian goods. The higher duties, introduced in August 2025, have disrupted supply chains, delayed payments, and squeezed cash flows across several export-driven sectors.
The RBI’s measures come at a time when exporters are grappling with reduced orders and repayment challenges. Alongside the Union government’s recently approved six-year, ₹25,060-crore Export Promotion Mission, the central bank’s intervention is expected to offer immediate breathing space to businesses until trade conditions stabilise.
Four-Month Moratorium to Ease Short-Term Stress
A key component of the relief package is a moratorium on loan and interest repayments from 1 September to 31 December 2025. During this period, exporters will not be required to service term loans or working capital interest.
While interest will continue to accrue, it will be charged at simple interest, not compounded. The accumulated interest will be converted into a separate loan, repayable between 31 March and 30 September 2026.
Banks and NBFCs have also been permitted to ease margin requirements during this period, allowing exporters to access slightly higher working capital against existing collateral- a move expected to boost liquidity during a critical phase.
Export Credit Tenure Extended to 450 Days
Recognising the delays in global shipping and payment cycles triggered by the tariff shock, RBI has extended the maximum repayment period for export credit from 270 days to 450 days.
This relaxation applies to both pre-shipment and post-shipment credit sanctioned up to 31 March 2026. Exporters who took packing credit before the end of August but could not dispatch goods on time can now repay through alternative means such as domestic sales or new export orders.
Temporary Suspension of Asset Classification Impact
In a departure from normal norms, the moratorium period will not be counted towards overdue days for loan classification. This ensures that exporters availing benefits will not face a downgrade to non-performing asset (NPA) status solely because of delayed repayments during the relief window.
Exporters’ credit scores will also remain unaffected, with Credit Information Companies instructed not to treat the moratorium as restructuring. However, banks must create a 5% general provision for overdue-but-standard accounts that opt for this relief.
Major FEMA Relaxations to Support Foreign Trade
To further support exporters’ cash flow cycles, RBI has amended several FEMA norms. Exporters now have 15 months, instead of nine, to realise and repatriate export proceeds.
Additionally, advance payments received from foreign buyers can now be serviced over a three-year window, significantly easing pressure on exporters facing prolonged production or logistical delays.
Tariff Shock Hits Key Sectors
The US’s unprecedented 50% tariff, the highest it has imposed on any country in recent years has had an immediate impact. India’s exports to the US fell by 12% in September, with sectors such as chemicals, plastics, leather, rubber goods, apparel, footwear, metal products, electrical machinery and furniture among the hardest hit.
Many exporters have reported delayed payments and mounting repayment challenges, prompting fears of rising defaults, a scenario the RBI is attempting to avert with its intervention.
Short-Term Stability, Long-Term Watchfulness
Industry analysts expect the measures to stabilise cash flows and prevent otherwise healthy export businesses from slipping into distress. Anil Gupta, Senior Vice President at ICRA, noted that the RBI’s steps, combined with the government’s credit guarantee initiatives, will “offer vital temporary relief” to viable exporters navigating the sudden tariff shock.
Banks may face increased provisioning requirements, but experts believe the overall impact on their profitability will be manageable unless relief is claimed at an unusually large scale.
Looking Ahead
The relief package arrives as India and the US continue discussions on a potential bilateral trade agreement. US President Donald Trump recently indicated that the US is considering tariff reductions as part of an upcoming trade deal, a development that could significantly ease pressure on exporters.
For now, the RBI’s measures are already in effect and are expected to serve as a crucial buffer for India’s export sector as global trade uncertainty continues.
