Finance Ministry To Review US Tariff Impact On MSMEs
ECONOMY & POLICY

Finance Ministry To Review US Tariff Impact On MSMEs

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.

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.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code