India’s RBI considering fresh exporter relief steps after low take‑up of loan moratorium, sources say

MUMBAI: India’s central bank is considering new ways to support exporters hit by U.S. tariffs after a moratorium on loan repayments it offered last year drew few takers, two sources aware of the matter said.

Sectors from garment-making and jewellery to leather goods and chemicals companies have been hit by Washington’s tariffs on imports from India of up to 50%, including a 25% levy imposed due to New Delhi’s purchases of Russian oil.

Earlier this week, U.S. President Donald Trump warned that tariffs could rise further unless India curbs its Russian oil imports, escalating the pressure as trade talks between the two countries drag on.

After the U.S. imposed its tariffs last year, the Reserve Bank of India and the government rolled out relief measures.

In November the RBI offered exporters with U.S. exposure the right to defer repayment of term loans due between September 1 and December 31, but fewer than a fifth of eligible exporters applied, prompting the central bank to think of other ways to help exporters, a source aware of its thinking said.

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The RBI is weighing whether to loosen the eligibility criteria for the loan moratorium or allow for fresh lending at subsidised interest rates, the source said.

Banks were required to show proof of revenue loss, which many firms could not do by December, according to a senior public sector banker who also said very few exporters had applied for the moratorium on payments.

In talks with the government, bankers have said cash subsidies that help reduce the impact of business losses or squeezed export margins may be more helpful than loan relief, the banker said.

The sources declined to be identified as they are not authorised to speak to the media. A spokesperson for the RBI did not respond to a Reuters query.

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The central bank and bankers are also in conversation with export agencies to assess the flow of orders in the new year before finalising new relief measures, the two sources said.

India’s exports to the U.S. remained resilient until November as many exporters had locked in orders prior to the tariffs being imposed while others offered to ship goods at lower margins to avoid losing all revenue.

January orders are moderating or producing thinner margins, raising concern that existing relief measures may not offset weak demand, at least four exporters across the textiles, chemicals and engineering goods industries said.

Contracts for the new year which typically get finalised in December are also being deferred temporarily, said Ajay Sahai, CEO of the Federation of Indian Export Organisations.

“But since a trade deal has not been finalised yet, buyers have agreed to defer…till end of January,” he said.

This month the trade ministry began a scheme offering interest-cost subsidies for certain kinds of short-term credit used by small and midsized exporters, as part of the government’s 450.6 billion-rupee ($5.1 billion) support package for exporters approved last year.