India has announced a $5 billion plan to boost export competitiveness as it faces sweeping US tariffs linked to its continued purchases of Russian oil.

Washington imposed duties of up to 50 percent on Indian goods in what it called a response to New Delhi’s stance on the Ukraine conflict, deepening economic tensions between the two countries.

Prime Minister Narendra Modi said on Thursday that the government had approved an Export Promotion Mission (EPM) to “improve export competitiveness.” The nearly $3 billion initiative, running until 2030–31, will replace several older schemes and focus on helping small manufacturers access cheaper trade finance and meet international quality standards.

“Priority support will be extended to sectors impacted by recent global tariff escalations,” the Ministry of Commerce said in a statement late Wednesday. “The mission is designed to directly address structural challenges that constrain Indian export.”

Information Minister Ashwini Vaishnaw also announced a $2.3 billion credit guarantee scheme for exporters, citing the “current global environment… where the policies of some countries are causing hardship to others.”

The government said the measures would focus on labour-intensive sectors such as textiles, leather, gems and jewellery, engineering, and marine products.

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

But US tariffs remain a major headwind. Economists warn the trade restrictions could cut between 60 and 80 basis points from India’s GDP growth this fiscal year if they persist.

Talks between Washington and New Delhi are continuing, though disagreements over agricultural trade and accusations that India’s oil imports from Russia help fund the war in Ukraine have stalled progress.