The Finance Ministry will hold a meeting with public sector banks (PSBs) to discuss the impact of the 50% tariff increase by the US on micro, small, and medium enterprises (MSMEs). The meeting will also look at the credit needs of these businesses, a senior official said.
The meeting will be chaired by DFS Secretary M. Nagaraju. The goal is to understand how international trade pressures are affecting MSMEs and to make sure they continue to get enough financial support under government schemes.
Officials said the meeting will review funding provided through programs such as MUDRA loans and other credit guarantee schemes run by the government. Recently, MSMEs in the engineering sector met with RBI Governor Sanjay Malhotra to explain how the US tariffs are affecting them. They requested help to reduce borrowing costs for exporters.
EEPC India Chairman Pankaj Chadha said that India’s engineering exports to the US are about $20 billion, which is roughly 45% of all Indian exports exposed to US tariffs. He added that this shows how vulnerable the sector is and stressed the need for urgent government support.
Chadha also highlighted problems faced by MSME exporters in getting collateral-free loans for export financing. Banks often require high collateral, and the credit rating system used by banks can make interest rates higher for MSMEs. As a result, many MSMEs end up paying more interest even when they provide significant collateral.
He also suggested that the US exposure of engineering exporters should not negatively affect their credit ratings. He recommended that rating agencies exclude US exposure when calculating credit ratings, at least for this year, to provide relief to exporters.
