By Sanskriti Global Exports by Himanshu Gupta
Navigating Turbulence: India Unveils Major Export Boost as US Trade Deal Faces New Twists
New Delhi, 21 February 2026 – In a remarkable juxtaposition of policy certainty at home against growing uncertainty abroad, India's trade landscape has been dramatically reshaped in the last 24 hours. Even as the ink is yet to dry on the landmark India-US interim trade agreement, a stunning US Supreme Court decision and a defiant response from the White House have introduced significant turbulence. Back in New Delhi, the Commerce Ministry responded not with anxiety, but with action, launching a comprehensive suite of measures to bolster the bedrock of India's export economy: its Micro, Small, and Medium Enterprises (MSMEs).
The US Trade Deal Rollercoaster
The week began with optimistic projections. Commerce and Industry Minister Piyush Goyal had just announced that the interim trade pact with the United States, hailed for reducing a punitive 50% tariff regime down to 18%, was on track to be signed in March and operational by April. [7, 11] This deal was seen as a major victory, set to provide Indian exporters with a crucial pricing advantage in the world's largest consumer market. [2] However, the narrative took a sharp turn on Friday. The US Supreme Court delivered a significant blow to President Donald Trump's trade policy, ruling that he had exceeded his legal authority in using the International Emergency Economic Powers Act (IEEPA) to impose broad-based 'reciprocal tariffs'. [8, 22] This was the very authority under which the previous high tariffs on India were justified. In a swift reaction, President Trump announced he would instead invoke a different authority, Section 122 of the Trade Act of 1974, to impose a new, temporary 10% global tariff on all imports for 150 days. [8, 18] This initially created confusion, with some analysts suggesting India's tariff burden could unexpectedly fall further to 10%. [18] However, President Trump quickly dispelled that notion, stating emphatically that the deal with India remains unchanged. "Nothing changes. They'll be paying tariffs, and we will not be paying tariffs," he told reporters, confirming the 18% rate for India stands. [16] This development has provided fodder for political criticism in India, with the opposition Congress party labelling the deal an "ordeal" born of "desperation and surrender". [18, 21]
A Proactive Push from New Delhi: Empowering the Exporter
While the drama unfolds in Washington, the Indian government has turned its focus inward, launching a decisive strategy to strengthen its export ecosystem from the ground up. On Friday, Commerce Minister Piyush Goyal unveiled seven new interventions under the Export Promotion Mission, a flagship initiative aimed squarely at empowering MSMEs to compete globally. [3, 12] This move is a direct acknowledgment of the structural challenges that small exporters face. The new measures are designed to tackle critical issues like the high cost of capital, constrained access to trade finance, and logistical bottlenecks. [3] The interventions are both strategic and practical:
- Enhanced Credit Access: A 'Direct E-Commerce Credit Facility' will provide working capital support up to ₹50 lakh with 90% guarantee coverage. For those looking to maintain inventory abroad, an 'Overseas Inventory Credit Facility' will extend support up to ₹5 crore. Both come with a significant interest subvention of 2.75%. [3, 9]
- Affordable Trade Finance: To promote export factoring as a viable working capital solution, the government will provide an interest subvention of 2.75% on the factoring cost, aiming to improve liquidity cycles for MSMEs. [9, 12]
- Logistical Support: To help exporters establish a physical presence in foreign markets, the ministry will provide assistance of up to 30% of the project cost for setting up overseas warehouses and fulfilment infrastructure. [9] Furthermore, a special scheme called 'Logistics Interventions for Freight and Transport' (LIFT) will mitigate the geographical disadvantages for exporters in remote, hilly, and northeastern regions by partially reimbursing freight expenditure. [9, 12]
The Broader Strategic Horizon
The twin developments highlight India's multi-pronged trade strategy. While navigating the complexities of its relationship with the US, India continues to diversify its trade partnerships. Free Trade Agreements (FTAs) with the United Kingdom and Oman are also anticipated to be implemented in April, with a pact with New Zealand to follow in September. [7, 11] These agreements, coupled with the recently signed EU-India FTA, demonstrate a clear strategic pivot towards creating a broader, more resilient network of trade partners. [2] The real-world consequences of these high-level agreements are already visible. As India moves to fulfil its commitment under the US deal to cease purchasing Russian oil, crude imports from Saudi Arabia are reportedly set to reach their highest levels since 2020. [23] The domestic economic picture provides a compelling backdrop for these policies. While India's private sector activity accelerated to a three-month high in February, driven by strong manufacturing output, the data also contains notes of caution. [17] Growth in new export orders for manufacturers has decelerated to its slowest pace in 16 months, and the trade deficit in January widened, underscoring the need for the very export-boosting measures the government has just announced. [17] In conclusion, while the path of the India-US trade relationship appears to be fraught with fresh uncertainty, India's proactive domestic policy offers a clear-eyed strategy for the future. By focusing on empowering its MSME exporters, New Delhi is placing its bet on a foundational, long-term approach to building global competitiveness. The coming months, particularly the target implementation date of April, will be critical in determining how these two powerful, and currently contrasting, narratives will shape the future of Indian trade.
Source: Original