Lok Sabha Question No. 1015 (UNSTARRED), answered on 2026-02-05
Subject: Impact of Tariff on MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Smt. June Maliah, Shri Eswarasamy K

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

## LOK SABHA UNSTARRED QUESTION NO. 1015 TO BE ANSWERED ON: 05.02.2026

## IMPACT OF TARIFF ON MSMEs

## 1015.           SMT. JUNE MALIAH: SHRI ESWARASAMY K:

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

(a) whether  the  Government  has  assessed  the  impact  of  recent  United  States  of  America  (USA) tariff hikes, reportedly reaching 50% on India's Micro, Small and Medium Enterprises (MSMEs) export sector;

- (b) if so, the details of the decline in MSME exports to the U.S. market between May and October 2025:
- (c) the share of export (in percentage and Rupees) to USA from MSMEs in the country since 2019, State and year wise;

(d) whether the Government proposes to introduce any relief measures such as emergency credit lines or export incentives to mitigate losses faced by MSME exporters and if so, the details thereof;

(e) the steps being taken to protect MSME competitiveness in key sectors such as textiles, gems and jewellery, chemicals and machinery which have reportedly suffered a 33% decline during the same period; and

(f) the estimated number of job losses after imposition of tariffs by USA?

## ANSWER

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

(a) to (c): 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.

(d) to (f) : 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 202627 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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