Lok Sabha Question No. 2170 (UNSTARRED), answered on 2026-02-12
Subject: Impact of US Tariffs on MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Thiru Arun Nehru

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 2170 TO BE ANSWERED ON: 12.02.2026

## IMPACT OF US TARIFFS ON MSMEs

## 2170.           THIRU ARUN NEHRU:

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

- (a) whether  the  Government  has  assessed  the  impact  of  recent  US  tariffs  on  Micro,  Small  and Medium Enterprises (MSMEs) in Tamil Nadu, particularly in sectors like textiles, auto components, leather and electronics;
- (b) if  so,  the  details  of  effects  on  domestic  production,  job  creation  and  competitiveness,  along with details of impacts on supply chain disruptions and reduced exports;
- (c) the number of MSMEs in Tamil Nadu affected by these tariffs;
- (d) whether specific relief measures, including subsidies, low-interest loans or exemptions, support for market diversification have been implemented to support affected MSMEs; and
- (e) if  so,  the  outcomes  thereof  and  future  plans  to  safeguard  MSMEs  from  tariff-related challenges?

## ANSWER

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

(a) to (c): India's MSME exports increased from Rs. 11.31 lakh crore in April-November 2024 to Rs. 12.81 lakh crore in April-November 2025 registering a growth of 13.26%. During this period, the key  sectors  contributing  to  MSME  export  growth  were  electronic  goods,  textiles  and  apparel, pharmaceuticals, and engineering goods.

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. The Budget 2026-27 has also announced a support of Rs 2000 crore to top up the Self-Reliant India Fund set up in 2021 to continue support to micro enterprises and maintain their access to risk capital.
- 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 to Rs.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  non-financial  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.

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