India To Roll Out Credit Guarantee Programme For US Tariff Affected Business Owners & Exporters

Amid expectations that 55 per cent Indian exports to the US will face the brunt of Trump's 50 per cent levy imposition, India plans to make credit guarantees accesible for loans overdue upto 90 days for exporter and small business owners, as per a Reuters report. 

The Ministry of Finance has proposed to offer 10 per cent - 15 per cent credit gurantees to lenders for providing loans to under pressure small businesses with turnover of upto Rs 43,830 crore, which falls under the Reserve Bank of India's (RBI) so-called special mention accounts (SMA), the sources said, citing a Reuters report. 

The south Asian nation's small businesses still struggle with limited access to timely and adequate formal credit.

The centre will allocate about Rs 3,50,640 crore for providing guarantees to banks, both sources said, citing a Reuters report. 

The scheme is meant for entities facing stress under external factors "beyond their control", and the eligibility criteria are being firmed up, according to the sources, citing a Reuters report.

The criteria will cover small exporters, who are currently facing uncertainties due to higher tariffs imposed by the U.S., the largest market for Indian exports.

Separately, the centre is preparing a scheme to provide term loans for small exporters that would be backed by a government guarantee of a maximum 70 per cent-75 per cent.

The scheme was announced by Finance Minister Nirmala Sitharaman in the budget for fiscal year (FY) 2026.

Banks Assess Sector-Wise Risk Amid Tariff Induced Pressure 

The banks headquartered in India have begun assessing their portfolios to gauge risks in sectors based on their exposure to the U.S. market, three bankers aware of the matter said, citing a Reuters report. 

The assessments are internal and are not done on the directives of the RBI, they added.

Small and medium-sized enterprises in the textile and jewellery sectors are expected to face the most impact, a banker said, citing a Reuters report. 

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While the pharmaceutical segment is currently exempt from tariffs, lenders are exercising caution given that sectors with large exposure to the U.S. market are expected to face the maximum brunt, they added.

Banks are also expecting disruptions to supply chains linked to U.S. trade, which may hamper some of the smaller businesses' ability to repay loans on time in the short run, a second banker cited above said.