India is preparing a $1 billion relief package for its footwear exporters to absorb the impact of 50% US tariffs imposed under the Trump administration, The Economic Times has reported.

The support, currently under government review, would target an industry that supplies a significant share of US footwear imports. The Economic Times reported the package aims to cushion manufacturers from a duty regime that has disrupted order pipelines since the higher tariff took hold.

What would the $1 billion deliver?

According to the report, the proposed package could include:

• Working capital support for footwear manufacturing units
• Assistance to maintain export price competitiveness against lower-tariff origins
• Backstop measures for suppliers facing order cancellations

The Economic Times reported that inter-ministry officials are reviewing the relief framework. India's Ministry of Commerce and Industry has yet to issue a formal notification. The dollar value, sectoral scope, and disbursement mechanism remain subject to finalisation.

How exposed is the footwear trade?

The 50% US tariff on Indian-origin footwear sits well above duty rates applied to competing Asian manufacturing hubs, including Vietnam, Indonesia, and Bangladesh. India has long supplied the US market across leather, athletic, and casual categories, and the duty differential has prompted US buyers to accelerate sourcing reviews.

Industry voices cited in Indian financial press have warned that without government support, employment in footwear manufacturing clusters could face pressure as order volumes contract. The Economic Times reported that smaller units are the most exposed given limited capacity to absorb a 50% landed-cost penalty.

What is the compliance path?

Any direct relief to footwear exporters would need to satisfy both Indian fiscal rules and World Trade Organization subsidy disciplines. Past Indian support packages for sectors hit by US trade action have drawn on existing export-promotion schemes, including:

• The Interest Equalisation Scheme for exporters
• Export Promotion Capital Goods (EPCG) framework
• Market Access Initiative funding for buyer development

A $1 billion allocation, if confirmed, would rank among the larger sector-specific cushioning measures New Delhi has assembled in response to Trump-era tariffs on Indian exports. The Economic Times reported that the finance ministry is weighing the fiscal cost against the sector's employment footprint.

What decision does the news force?

For US footwear brands and retailers currently sourcing from India, the report forces a near-term sourcing calculation: whether to absorb the 50% duty, accelerate diversification to lower-tariff origins, or hold Indian capacity pending confirmation of a support package that may restore price parity.

For Indian suppliers, the question is whether disbursement — if the package is approved — will arrive quickly enough to bridge the order gap before buyers complete their sourcing migration. For New Delhi, the proposal tests how far fiscal support can offset a duty differential of this magnitude without breaching WTO subsidy ceilings.

The compliance and sourcing decision is now time-boxed. Confirmation or rejection of the $1 billion package, and the speed at which any approved support reaches the factory floor, will determine whether Indian footwear retains its place in US sourcing books through the next order cycle.