RBI unveils emergency lifeline for exporters hit by 50% US tariffs

The Reserve Bank of India has rolled out a sweeping relief package for exporters squeezed by the United States’ steep 50% tariffs on Indian goods — a shock that has slowed shipments, delayed payments and tightened cash flows across key sectors.

The measures, effective immediately, are designed to ease debt-servicing stress and help exporters navigate what policymakers describe as a period of “extraordinary global headwinds.” The announcement follows the Union government’s approval of a six-year, ₹25,060-crore Export Promotion Mission, signalling a coordinated push to stabilise India’s outward trade.

A four-month pause on loan repayments

From September 1 to December 31, 2025, banks, NBFCs and all-India financial institutions must offer a moratorium on term-loan instalments and a deferment of interest on working-capital loans. Interest will continue to accrue — but on a simple-interest basis — and will be converted into a funded interest term loan repayable between March 31 and September 30, 2026.

For working-capital borrowers, lenders have also been permitted to recalculate drawing power by easing margin requirements during the moratorium.

Longer export-credit windows

To prevent order delays from turning into defaults, the RBI has extended the permissible credit period for pre- and post-shipment export credit from 270 days to 450 days for loans disbursed till March 31, 2026.

Exporters who availed packing credit before August 31, 2025 but were unable to ship goods amid tariff-driven disruptions can now liquidate these loans through legitimate alternate routes — including domestic sale proceeds or proceeds from a substituted export order.

No asset-classification downgrade

In a major regulatory relaxation, lenders must exclude the moratorium period while calculating days past due (DPD). The relief will not be treated as restructuring and will not trigger a downgrade of asset classification. The RBI has also directed credit information companies to ensure that such relief does not harm borrowers’ credit histories.

Banks, however, are required to create a 5% general provision against accounts that were standard but already in default as on August 31, 2025 and have been granted relief.

FEMA rules eased to allow more time

Exporters will now get 15 months — instead of nine — to realise and repatriate export proceeds. The window for shipping goods against advance payments has also been tripled from one year to three.

Why the measures became unavoidable

The US tariffs — the highest imposed on any country — took effect on August 27 as part of a penalty linked to India’s purchases of Russian oil. Indian shipments to the US fell 12% in September, triggering delayed payments, rising operational costs and mounting repayment risks for exporters in sectors such as chemicals, plastics, textiles, leather, steel, machinery, aluminium and furniture.

The RBI’s intervention aims to prevent a wave of stressed accounts. “The proposed regulatory measures, coupled with the government’s credit-guarantee scheme, could provide liquidity relief and help exporters ride out near-term cash-flow pressures,” said Anil Gupta, Senior Vice President & Co-Group Head, Financial Sector Ratings, ICRA Ltd.

What the relief means for lenders

While the package offers crucial breathing space to exporters, it also raises monitoring challenges. A surge in moratorium requests could cloud banks’ visibility on asset quality, Gupta cautioned. The mandatory 5% provisioning requirement may push up costs, though it is unlikely to materially dent near-term profitability.

A backdrop of tense but active diplomacy

The relief package arrives as India and the US continue negotiations on a bilateral trade agreement. US President Donald Trump has signalled willingness to roll back tariffs, saying both sides are “pretty close” to finalising a fair trade deal.

Until then, the RBI’s measures will serve as a financial buffer — an attempt to keep viable exporters afloat, safeguard credit quality and steady India’s trade momentum in a turbulent global climate.