Finance Ministry To Review US Tariff Impact On MSMEs

16 Oct 2025 CW Team

The meeting, to be chaired by Department of Financial Services (DFS) Secretary M. Nagaraju, will review the performance of financial inclusion schemes such as MUDRA and credit guarantee programmes, with a focus on understanding how external trade pressures are affecting MSMEs. The discussion will also ensure that sufficient credit support is being maintained under ongoing government schemes.

Officials are concerned that the higher US tariffs may increase the risk of non-performing assets (NPAs), particularly in MUDRA loan portfolios. The DFS is expected to seek inputs from bankers on corrective measures to mitigate this potential stress.

As of September 2025, Rs 990.64 billion had been disbursed under the Pradhan Mantri MUDRA Yojana (PMMY) against an annual target of Rs 2.4 trillion for FY26—representing about 42 per cent of the total.

Industry representatives have expressed strong concerns about the impact of US trade restrictions. Vinod Kumar, President of the India SME Forum, told Business Standard that the tariff hike could lead to annual business losses exceeding USD 30 billion, with MSMEs being the most vulnerable due to limited financial buffers and operational constraints.

The review will also assess progress under the Pradhan Mantri Jan Dhan Yojana (PMJDY), with banks instructed to reduce the number of inactive accounts through targeted outreach efforts.

Meanwhile, the government has taken steps to support MSME growth, including increasing the investment and turnover limits for MSME classification by 2.5 times and 2 times, respectively, to expand eligibility and encourage scaling.

According to the Ministry of Micro, Small & Medium Enterprises, MSMEs have maintained a robust growth trajectory, contributing 45.73 per cent to India’s exports in FY2023-24, which rose to 46.79 per cent by May 2024, underscoring their growing role in the nation’s trade performance.

A report by the Federation of Indian Chambers of Commerce & Industry (FICCI) further highlighted the need for MSMEs and policymakers to collaborate on developing a sustainability-oriented policy framework. The report recommends setting ESG and green technology targets and simplifying compliance procedures to help integrate sustainability across India’s SME landscape.

The Ministry of Finance will hold a review meeting on 13 October with public sector banks (PSBs) to assess the impact of US punitive tariffs on India’s micro, small and medium enterprises (MSME) sector and evaluate their credit requirements, according to a report by Business Standard. The meeting, to be chaired by Department of Financial Services (DFS) Secretary M. Nagaraju, will review the performance of financial inclusion schemes such as MUDRA and credit guarantee programmes, with a focus on understanding how external trade pressures are affecting MSMEs. The discussion will also ensure that sufficient credit support is being maintained under ongoing government schemes. Officials are concerned that the higher US tariffs may increase the risk of non-performing assets (NPAs), particularly in MUDRA loan portfolios. The DFS is expected to seek inputs from bankers on corrective measures to mitigate this potential stress. As of September 2025, Rs 990.64 billion had been disbursed under the Pradhan Mantri MUDRA Yojana (PMMY) against an annual target of Rs 2.4 trillion for FY26—representing about 42 per cent of the total. Industry representatives have expressed strong concerns about the impact of US trade restrictions. Vinod Kumar, President of the India SME Forum, told Business Standard that the tariff hike could lead to annual business losses exceeding USD 30 billion, with MSMEs being the most vulnerable due to limited financial buffers and operational constraints. The review will also assess progress under the Pradhan Mantri Jan Dhan Yojana (PMJDY), with banks instructed to reduce the number of inactive accounts through targeted outreach efforts. Meanwhile, the government has taken steps to support MSME growth, including increasing the investment and turnover limits for MSME classification by 2.5 times and 2 times, respectively, to expand eligibility and encourage scaling. According to the Ministry of Micro, Small & Medium Enterprises, MSMEs have maintained a robust growth trajectory, contributing 45.73 per cent to India’s exports in FY2023-24, which rose to 46.79 per cent by May 2024, underscoring their growing role in the nation’s trade performance. A report by the Federation of Indian Chambers of Commerce & Industry (FICCI) further highlighted the need for MSMEs and policymakers to collaborate on developing a sustainability-oriented policy framework. The report recommends setting ESG and green technology targets and simplifying compliance procedures to help integrate sustainability across India’s SME landscape.

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