Govt to launch measures for tariff-hit MSMEs

The Indian government will soon be coming up with measures for small and medium enterprises hit by the US tariff. According to reports from The Indian Express, a source from the Ministry of Micro, Small and Medium Enterprises (MSME) confirmed that the body is working on ensuring that measures beyond credit guarantee schemes for the tariff-hit sector are implemented at the earliest. 

The textiles, apparels, and carpets sectors are the worst hit by the Trump tariffs. 

The media source confirms that there is a concern of piling of non-performing assets and unemployment in these sectors, and thus, the government is planning to take possible measures. 

The US administration imposed a total tariff of 50% on Indian exports—10% baseline duty, a 25% reciprocal tariff announced on April 2, 2025; and an additional 25% tariff announced on August 27, 2025. This tariff is imposed on apparel, jewellery, chemicals, footwear, and seafood industries. According to sources, Indian exports to the US were $79.44 billion in 2024. 

The proposed government measures aim to cushion Indian exporters, particularly MSMEs, from losses caused by reduced competitiveness in the US market, while helping them diversify into new export destinations.

According to government sources, the Finance Ministry is still finalising the size of the credit package that MSMEs can access under the scheme. A senior official confirmed that discussions are underway and that a “substantial amount will be made available” to ensure uninterrupted credit flow to the sector.

MSMEs have been struggling with a persistent capital crunch triggered by delayed payments and rising input costs. With an overall credit exposure of nearly Rs 40 lakh crore, analysts warn that further financial strain could push more enterprises toward distress, raising the risk of non-performing assets (NPAs).

As per Crisil Ratings, the gross NPAs in the MSME loan portfolio of banks are projected to rise to around 3.9% by the end of FY26, compared to 3.59% in FY25, largely due to export disruptions and weaker global demand. MSME loans currently account for about 17% of the total outstanding credit in India’s banking system, underscoring the sector’s significance to the financial ecosystem.

The textile and apparel industry—one of the largest MSME-driven export sectors—has been among the hardest hit. Exports in this category fell by over 10% in September 2025 compared to the same month last year, reflecting both softer global demand and tariff-related pressures.

Similarly, marine products exporters have flagged concerns over declining shrimp exports to the US, which traditionally accounts for around 35% of India’s total shipments in this segment. Although official data for September are yet to be released, exporters expect overall marine exports to dip in FY26 due to the slowdown in their biggest market.