In a significant move to bolster India's export sector against ongoing global trade disruptions, the Reserve Bank of India (RBI) has announced a comprehensive package of trade relief measures. The central bank's intervention, effective immediately, offers crucial support including a debt moratorium and an extension of export credit periods to regulated entities.
Key Relief Measures for Exporters
The RBI's relief package targets specific sectors facing debt servicing challenges due to international trade volatility. The measures include a moratorium for eligible borrowers, extension of export credit tenor, and relaxation in asset classification norms. These provisions apply to all RBI-regulated entities, including commercial banks, non-banking financial companies (NBFCs), primary co-operative banks, and all-India Financial Institutions.
Eligible sectors benefiting from these measures encompass organic chemicals, plastic, rubber, leather, carpets, apparel and clothing accessories, footwear, articles of iron or steel, nuclear reactors, boilers, and electrical machinery and equipment and parts.
Loan Moratorium with Simple Interest Terms
To alleviate repayment pressures on affected sectors, the RBI has approved a moratorium on term loans and recovery of interest on working capital loans falling due between September 1, 2025, and December 31, 2025. During this period, interest will continue to accrue but on a simple interest basis without compounding effects.
The accumulated interest during the moratorium will be converted into a funded interest term loan, repayable in one or more instalments after March 31, 2026, but not later than September 30, 2026. For working capital facilities, regulated entities may recalculate 'drawing power' by reducing margins or reassessing working capital limits during the effective period.
Extended Export Credit Period
In a major boost to export financing, the RBI has enhanced the maximum credit period from 270 days to 450 days for both pre-shipment and post-shipment export credit disbursed until March 31, 2026. This substantial extension provides exporters with greater flexibility in managing their cash flows amid uncertain global market conditions.
For packing credit facilities availed by exporters on or before August 31, 2025, where goods dispatch couldn't occur, regulated entities may permit liquidation from legitimate alternate sources, including domestic sale proceeds or substitution with another export order.
Regulatory Relaxations and Reporting Requirements
The central bank has also introduced important regulatory relaxations concerning asset classification. The moratorium period will be excluded when calculating days past-due for asset classification under applicable Income Recognition, Asset Classification and Provisioning (IRACP) norms.
Grant of moratorium or deferment of instalments and recalculation of 'drawing power' will not be treated as restructuring. Credit Information Companies (CIC) have been directed to ensure that actions taken by regulated entities following these directions don't adversely impact borrowers' credit history.
For eligible borrower accounts that were in default but classified as 'standard' as on August 31, 2025, and where relief measures have been extended, a general provision of not less than 5% of the total outstanding must be made by December 31, 2025.
Regulated entities are required to develop Management Information Systems (MIS) on the relief provided to borrowers, including borrower-wise and credit facility-wise information regarding the nature and amount of relief granted. They must submit fortnightly reports to the RBI.
FEMA Regulation Relief
The RBI announced significant relief in Foreign Exchange Management Act (FEMA) regulations concerning realization and repatriation of export proceeds. The time period for realization and repatriation of full export value has been extended from nine months to 15 months from the date of export from India.
Additionally, the time period for shipment of goods has been increased from one year to three years from the date of receipt of advance payment, providing exporters with substantially more flexibility in fulfilling their contractual obligations.
This comprehensive relief package comes days after US President Donald Trump indicated that the US will reduce tariffs on India and that Washington is close to reaching a fair trade deal with New Delhi. India currently faces 50% tariffs, the highest on any country globally, primarily due to the 25% penalty duty for purchasing Russian oil.
