By Sanskriti Global Exports by Himanshu Gupta
Indian Exports Get Double Boost: US Tariffs Slashed and New MSME Support Unveiled
New Delhi, 21 February 2026 – In a significant and unexpected turn of events, Indian exporters have received a substantial boost from the United States, their largest market. A US Supreme Court ruling has led to the dismantling of a contentious tariff regime, which will be replaced by a much lower, temporary global surcharge. This development, which promises to enhance the competitiveness of Indian goods, coincides with a major domestic policy push, as the Ministry of Commerce rolled out a suite of new measures designed to empower Micro, Small, and Medium Enterprises (MSMEs) in the global marketplace. This confluence of favourable international and domestic developments signals a potentially transformative period for India's import-export sector.
A Transatlantic Tailwind: Unpacking the US Tariff Overhaul
The primary catalyst for this renewed optimism is the US Supreme Court's decision to strike down the sweeping, country-specific tariffs imposed by the Trump administration. In a 6-3 verdict, the court ruled that the President had exceeded his authority in introducing the levies, dealing a setback to a key pillar of his economic agenda.
In response, the White House has announced a temporary global import surcharge of 10% ad valorem, effective for 150 days from February 24, 2026. This new, uniform tariff replaces the previous and often punitive reciprocal tariffs, which had subjected many Indian exports to duties as high as 25%. The move effectively provides significant cost relief and restores a more predictable trade environment. For a majority of Indian exports, the effective average tariff is now expected to settle in the 13-14% range when combined with existing baseline duties, a marked improvement from the prior system.
This tariff reduction is a welcome reprieve for India's crucial labour-intensive sectors. Industry representatives have stated that pharmaceuticals, electronics, engineering goods, textiles, and gems and jewellery are expected to see a significant improvement in their competitiveness in the American market. The Indian Commerce Ministry has officially stated that it is closely studying the developments and their implications. This tariff reset will invariably require a realignment of the ongoing negotiations for an interim India-US trade deal, which had previously factored in a negotiated reciprocal tariff of 18%.
Domestic Firepower: Commerce Ministry's MSME-Focused Export Mission
As Indian exporters recalibrate their US market strategies, the home front has provided a timely and powerful support system. On Friday, the Ministry of Commerce introduced seven additional interventions under its Export Promotion Mission, a strategic initiative aimed at strengthening MSMEs to compete globally. Union Minister of Commerce Piyush Goyal noted that these measures are designed to address structural constraints faced by small enterprises, such as the high cost of capital, limited access to diversified trade finance, and logistical disadvantages.
The new initiatives offer tangible benefits. They include two new credit lines for e-commerce exporters: a Direct E-Commerce Credit Facility with funding up to ₹50 lakh and 90% guarantee coverage, and an Overseas Inventory Credit Facility providing up to ₹5 crore. Both come with a 2.75% interest subvention, aiming to strengthen exporter confidence and improve liquidity flows.
Furthermore, the 'Logistics Interventions for Freight and Transport (LIFT)' scheme will reimburse up to 30% of eligible freight expenses for exporters in low-export-intensity districts, capped at ₹20 lakh per year. This is a critical step in lowering the cost of exporting for businesses located far from major ports. These measures are being rolled out as India's merchandise exports have already recorded double-digit growth in the first half of February, indicating strong underlying momentum.
A Confluence of Opportunity
The synergy between the US tariff reduction and the government's new export support measures cannot be overstated. The external market access opportunity created by the lower US tariffs is now matched by an internal policy framework designed to help smaller players seize that opportunity. Indian MSMEs, the backbone of the economy, are now better equipped to price their products competitively and manage the financial and logistical complexities of exporting to the US.
This positive outlook is further bolstered by other strategic trade advancements. Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula Da Silva recently set an ambitious bilateral trade target of over $20 billion within the next five years, signalling a renewed drive to strengthen South-South cooperation. The pharmaceutical sector continues its strong performance, with exports reaching $30.47 billion in the 2024-25 fiscal year, a robust 9.4% increase. These developments, coupled with the government's broader agenda of customs duty rationalization laid out in the 2026 Budget, paint a picture of a nation strategically positioning itself for a new era of trade growth.
In conclusion, Indian trade is at a promising juncture. The unexpected tariff relief from its largest trading partner, combined with a targeted domestic support system for its most agile exporters, creates a powerful formula for growth. For Indian businesses, the message is clear: the time to strategize, innovate, and tap into the global market is now. The coming months will be crucial in observing how effectively the industry leverages this dual boost to carve out a larger share of the global export pie.
Source: Original