Washington has tied issues of war and peace to trade, slapping 50% duties on New Delhi in retaliation for its continued purchases of Russian oil.

Prime Minister Narendra Modi said in a statement today that the government had approved an “Export Promotion Mission (EPM)” to “improve export competitiveness”.

That nearly US$3 billion programme will run until 2030-2031, replacing several older schemes with a single framework aimed at helping small manufacturers access cheaper trade finance and meet global quality standards.

“Priority support will be extended to sectors impacted by recent global tariff escalations,” said the commerce ministry in its statement issued late yesterday.

“The mission is designed to directly address structural challenges that constrain Indian exports,” the ministry said.

Information minister Ashwini Vaishnaw announced a further US$2.3 billion “credit guarantee scheme for exporters”, saying it was needed due to the “current global environment… where the policies of some countries are causing hardship to others”.

“Efforts are intended to boost exports of labour-intensive goods such as textiles, leather, gems and jewellery, engineering and marine products,” it added.

India’s economy, the fifth-largest in the world, grew at its fastest pace in five quarters in the three months ending June 30, helped by higher government spending and improved consumer sentiment.

However, US tariffs continue to overshadow the economy, with experts projecting that they could shave anywhere between 60 to 80 basis points off India’s GDP growth this fiscal year, if there are no relaxations soon.

Both India and the US remain in deal negotiations, despite sharp disagreements over agricultural trade and accusations by US officials that New Delhi’s purchases of Russian oil help fuel the war in Ukraine.