Indian money lenders are concerned that the trade war will create new balance stress | Photocredit: Avijit Sadhu
Indian banks increase the control of new loan applications from exporters by asking about exposure to the American market and unforeseen plans for dealing with the steep rates of US President Donald Trump, according to people who are familiar with the issue.
Bloomberg News spoke with officials of five large Indian lenders who said they judge the financial consequences of the criminal taxes on their customers, in particular those in the export-dependent textile, gemstone and jewelry sectors. They all spoke about the condition of anonymity, because the information is not public.
Lenders ask borrowers more targeted questions when screening new export financing proposals or extensions of such financing said people. They added that some export assignments are put on hold, while trade negotiations take place between New Delhi and Washington.
The move comes after Trump doubled the rates in India-made items in the space of a week, with the extra levy that was in force on 27 August, which brought the cumulative rate to 50%. Companies are worried that this will seriously disrupt shipments to the US by making Indian export unaffordable.
The industries are the hardest-affected-they are also among the most labor-intensive hebben to introduce measures modified by Narendra to reduce the pain of the new trade barriers.
Indian lenders are worried that the trade war will create new balance stress and a few years ago painful memories of the troubled debt problem of the country is stuck.
According to people, some of their most important questions relate to cash flows, business continuity plans and efforts to share charges with other stakeholders such as distributors.
Some banks started to identify the most vulnerable customers internally by checking for financial parameters, such as the percentage of the US income, two people said Bloomberg News. The exposure to the borrowers with the highest risk due to American charges is currently not so worrying, they added.
Rollback -Hoop
Most exporters who have spoken to these bankers about the trade issue said they are hopeful for a partial recovery of the American rates.
Indian exporters have already started rearranging strategies to tackle the unexpected levies through measures such as expansion in other markets, so that the output is shifted from India to elsewhere and exploring acquisitions in the US.
Some cash-rich exporters can go through losses for about two years, but they are concerned about long-term loss of companies against rivals in Bangladesh and Pakistan, a person said. These neighboring countries are confronted with lower American taxes than India.
The Indian Trade Minister Piyush Goyal told Parliament at the end of last month that the federal government is concerned with exporters to assess the impact of rates and “take all the necessary steps to protect and promote our national interest.”
The export counter of the jewel and jewelry is looking for support such as financing lighting and duty conditions.
Other requests include a postponement of interest on work capital facilities of six months, 90-day pre-singing and penalty-free loan payment extensions and a freezing of downward revisions of credit assessments, said Kirit Bhansali, the chairman of the trade group, in a statement of 7 August.
Rating actions
Assessment companies have not yet taken action on the creditworthiness of exporters. However, loan companies are worried and are looking for government support to prevent a slip in ratings that will take the financing costs.
Other Indian business representatives want to see more liquidity in the banking system to compensate for damage caused by American rates.
The Indian government must “encourage banks to reduce interest rates” to keep companies standing, said Rahul Mehta, director at Mumbai -based Creative Garments PVT.
The removal of import duties on raw materials should also help, said Mehta, in which is called for a government response that resembles emergency policy from the COVID era.
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Published on August 11, 2025
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