RBI's Relief Measures for Exporters Amid US Trade Tensions
The Reserve Bank of India (RBI) announced several relief measures to support Indian exporters facing a 50% tariff imposed by the US. These measures aim to alleviate the burden of debt repayments and address trade disruptions.
Key Measures Announced by RBI
- Enhanced Credit Period:
- The maximum credit period for pre-shipment and post-shipment export credit has been extended from 270 days to 450 days, applicable for credit disbursed till March 31, 2026.
- Liquidation of Packing Credit Facilities:
- Exporters can liquidate packing credit facilities by August 31, 2025, if goods dispatch has not occurred. This can be done through legitimate alternative sources, including domestic sales or another export order.
- Moratorium on Debt Repayments:
- A moratorium or deferment of payment for term loans and interest on working capital loans is allowed for loans due between September 1 and December 31, 2025.
- Lenders can recalculate "drawing power" by reducing margins or reassessing during the same period.
- Extension for Export Realization:
- The time for realization and repatriation of export values has been extended from nine months to fifteen months from the date of export.
- Increased Shipment Period:
- The period for the shipment of goods has increased from one year to three years from the date of advance payment or agreement.
Context and Implications
US President Donald Trump recently mentioned the possibility of reducing tariffs on Indian goods, hinting at a potential "fair trade deal" with India. The RBI’s measures, combined with the Government of India's credit guarantee scheme for exporters, could offer liquidity relief and stabilize exporters' cash flows.
