Lok Sabha Question No. 3030 (UNSTARRED), answered on 2025-12-18
Subject: Impact of U.S. Tariffs on MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Shri  Selvaganapathi T.M., Shri Manickam Tagore B, Shri Suresh Kumar Shetkar, Shri Vijayakumar Alias Vijay Vasanth

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 3030 TO BE ANSWERED ON: 18.12.2025

## IMPACT OF U.S. TARIFFS ON MSMEs

## 3030.   SHRI SURESH KUMAR SHETKAR: SHRI MANICKAM TAGORE B: SHRI SELVAGANAPATHI T.M.: SHRI VIJAYAKUMAR ALIAS VIJAY VASANTH:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) the number of Micro, Small and Medium Enterprises (MSMEs) that have been directly hit by the recent U.S. tariffs and whether export-heavy sectors like textiles, carpet, diamonds and chemicals were  left  exposed  without  any  preventive  strategy  and  if  so,  the  details  thereof  and  the  reasons therefore;
- (b) the steps taken to address the worsening liquidity crisis-delayed payments, cancelled orders and shrinking margins-especially in clusters like Tirupur, Surat and Vapi;
- (c) whether the schemes such as Micro Units Development & Refinance Agency Ltd (MUDRA) and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) have been expanded to  provide  tariff-specific  relief  and  if  not,  the  reasons  that  MSMEs  are  still  struggling  without financial cushioning;
- (d) whether  the  Government  is  also  working  to  implement  measures  beyond  credit  guarantee schemes for tariff hit sectors at the earliest, if so, the details thereof;
- (e) whether piling up of non-performing assets and unemployment in these sectors are a serious concern, if so, the details thereof;
- (f) the  concrete  measures being implemented by the Government to stabilise disrupted supply chains and protect MSMEs' global competitiveness amid rising lead times and price pressures; and
- (g) the  reasons  for  still  delaying  approval  for  the  demands  for  interest  subvention,  extended credit  timelines  and  emergency  credit  lines,  despite  widespread  layoffs  and  production  cuts  in multiple MSME sectors?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

(a): India's  merchandise  exports  during  April  to  October  2025  have  demonstrated  resilient performance  despite  challenging  global  conditions  including  recent  U.S.  tariff  hike.  Overall, merchandise  exports  for  the  fiscal  year  so  far  remain  positive  compared  to  the  previous  year, reflecting  underlying  resilience  despite  global  economic  volatility,  geopolitical  disruptions  and softened  demand  in  some  markets.  India's  export  sector  continues  to  demonstrate  strength  and diversification amid challenging external conditions.

(b) to (g): The Government continues to work to mitigate the impact of the US tariff measures on Indian exports through a comprehensive  multi-pronged strategy encompassing  intensive engagement with the US Government for a mutually beneficial India-US Bilateral Trade Agreement, immediate  relief  through  Trade  relief  measures  of  RBI,  Credit  Guarantee  Scheme  for  Exporters, enhancement  of  domestic  demand  through  next  generation  GST  reforms,  Export  Promotion measures such as the new Export Promotion Mission which provide support and assistance to our exporters, pursuing FTAs with new countries and better utilization of existing FTA. It is expected that  these  measures  will  also  enhance  diversification  and  resilience  in  India's  trade  relationships. The  Government  remains  engaged  with  all  stakeholders-including  exporters,  Export  Promotion Councils  (EPCs),  MSMEs,  industry  associations,  and  state  governments-to  assess  the  evolving impact of the U.S. tariff measures

Reserve  Bank  of  India  (RBI)  has  taken  several  measures  for  improving  credit  flow  to MSMEs (including exporters) including regulations issued by RBI which stipulate (i) collateral free lending  for  loans  upto  Rs.  10  lakhs,  (ii)  allows  relaxed  capital  requirement  for  such  lending,  (iii) transparency  in  interest  rates  by  linking  to  external  benchmarks,  etc.  Additionally,  RBI  issued Reserve  Bank  of  India  (Trade  Relief  Measures),  2025  on  14.11.2025  providing  various  relief  to exporters including deferment in repayment of interest and principal installments, extending export proceeds realisation period, flexibility in packing credit liquidation, etc.

Furthermore,  the  Government  has  undertaken  the  following  initiatives  to  provide  new  impetus  to MSME resilience and growth:

- (i) Credit  Guarantee  Scheme  (CGS) for Micro and Small Enterprises  (MSEs) through Credit Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE)  to  provide  credit guarantee  of  upto  Rs.  10  crore  on  loans  extended  to  MSEs  without  collateral  security  or third-party guarantees.
- (ii) Self Reliant India (SRI) Fund to infuse Rs. 50,000 crore as equity funding in those MSMEs which have the potential and viability to grow and become large units. Under this scheme total size of fund of Rs. 50,000 crore has a provision of Rs.10,000 crore from Government of India and Rs.40,000 crore through Private Equity / Venture Capital funds. This initiative is aimed at providing growth capital to the deserving and eligible units of MSME sector.
- (iii).  Mutual  Credit  Guarantee  Scheme  for  MSMEs  (MCGS-MSME),  a  government-backed initiative designed to help Micro, Small, and Medium Enterprises (MSMEs) access loans to grow their businesses. This scheme offers a credit guarantee, making it easier for MSMEs to obtain  loans,  especially  for  purchasing  essential  equipment  and  machinery.  The  Scheme provides  credit  guarantee  cover  to  lenders  (Scheduled  Commercial  Banks,  All  India Financial Institutions, NBFCs) for their term loans up to Rs.100 crore to MSMEs for their projects involving purchase of equipment/machinery.
- (iv).  Subsequent  to Union  Budget Announcement 2024-25, twenty-six (26) branches have been opened  by  SIDBI  all  over  India  during  FY  2024-25  to  expand  its  reach  to  serve  MSME clusters  and  provide  direct  credit  to  them.  37  branches  are  proposed  to  be  opened  in  FY 2025-26 out of which 34 branches have since been opened. Further, SIDBI will continue to open new branches to expand its reach to serve all major MSME clusters by 31.03.2027.

- (v).   The Government of India has approved the Credit Guarantee Scheme for Exporters (CGSE) on  12.11.2025  to  provide  additional  credit  support  up  to  20%  of  existing  working  capital limits to eligible borrowers, particularly MSMEs. By enabling collateral-free credit access under  CGSE,  the  Scheme  is  expected  to  enhance  the  global  competitiveness  of  Indian exporters and support diversification into new and emerging markets. The facility has been made operational w.e.f. 25.11.2025 on pan-India basis.
- (vi). As  informed by the Reserve Bank of India (RBI), in order to provide a simpler and faster mechanism  to  address  stress  in  the  accounts  of  Micro,  Small  and  Medium  Enterprises (MSMEs), the RBI has put in place a Framework for Revival and Rehabilitation (FRR) vide circular dated March 17, 2016, for MSME units having loan limits up to Rs. 25 crore.

As per the FRR guidelines, banks shall identify incipient stress in MSME accounts based on early  warning  signals.  The  branch  maintaining  the  account  shall  consider  forwarding  the stressed  accounts  with  aggregate  loan  limits  above  Rs.10  lakh  to  a  committee,  whereas accounts  with  loan  limits  up  toRs.10  lakh  shall  be  examined  at  the  branch  level  for Corrective  Action  Plan  (CAP).  The  resolution  under  CAP  may  include  rectification, restructuring, and recovery.

- (vii).  Export  Promotion  Mission  (EPM)  has  been  approved  on  12.11.2025  as  a  comprehensive framework  to  strengthen  the  overall  export  ecosystem.  Under  EPM,  support  shall  be provided  through  NIRYAT  PROTSAHAN,  which  focuses  on  trade  finance  facilitation including support for interest subvention, factoring, E-Commerce Credit Card, Collateral for export  Credit  etc.  for  MSME  exporters,  and  NIRYAT  DISHA,  which  shall  provide  nonfinancial support including export-quality and compliance assistance, market-access interventions, logistics facilitation, and export ecosystem-building measures.
- (viii).  GST  rationalisation  undertaken  by  the  government  directly  strengthen MSMEs fortifying local  supply chains in critical sectors like automobiles, textiles, food processing, logistics, and handicrafts. Lower GST rates have made raw materials and services more affordable, motivating  small  and  medium  enterprises  and  start-ups  to  scale  up  operations,  invest  in innovation, and compete both domestically and globally.
- (ix).  International Cooperation Scheme: The scheme aims to capacity build MSMEs for entering export market by facilitating their participation in international exhibitions/fairs/conferences/seminar/buyer-seller meets abroad as well as reimbursement of various costs involved in exports.

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