MSME Lifeline – New Credit Scheme to Counter 50% US Tariffs
The Ministry of Finance is in the final stages of rolling out a dedicated credit support scheme aimed at helping Micro, Small, and Medium Enterprises (MSMEs) combat the debilitating impact of the steep, up to 50%, US tariffs.
Sources indicate that the new credit guarantee program is expected to be announced as early as next month (November 2025) and is designed to aid exporters facing significant losses and encourage them to diversify into new global markets.
Government officials emphasize that this financial aid is a necessary step to stabilize businesses while trade talks progress. The goal is to provide a decisive measure that encourages exporters to overcome the immediate tariff shock through credit, while concurrently pushing the agenda for market diversification.
Key Features of the Proposed Scheme
The central feature of the government’s intervention will be a credit guarantee programme with the following known details:
• Maximum Loan Facility: MSME exporters will be able to avail loans of up to ₹100 crore.
• Modelled On: The proposed scheme will be modeled on the existing Mutual Credit Guarantee Scheme (MCGS) for the manufacturing sector, but with intentionally simplified terms to quickly address the heavy tariff impact on exports.
• Purpose: To provide necessary credit and financial comfort to aid exporters and facilitate their move towards new markets, reducing reliance on the US.
• Guiding Principle: The government is focused on ensuring the benefits of the scheme reach the affected exporters in a direct and effective manner.
Sectors Seeking Urgent Intervention
The need for the scheme is critical, as the steep duties imposed by the US have severely hurt labor-intensive industries. Associations representing key export sectors have held multiple discussions with the Ministry of Finance to seek urgent relief. These industries include:
• Leather
• Carpets
• Shrimp/Marine Products
• Textiles
This financial distress is reflected in national trade figures. The overall impact of the tariffs, which began to be reflected in September-October trade data, contributed to India’s merchandise trade deficit widening to a 13-month high of $32.15 billion in September.
Conclusion
The upcoming scheme signals the government’s recognition of the severe financial stress on exporters. MSME units in affected sectors should prepare their loan requirements and business diversification plans to take immediate advantage once the final, simplified scheme is formally announced next month.
By launching this simplified credit guarantee scheme, the Finance Ministry aims to provide a crucial lifeline, ensuring that MSMEs have the necessary working capital to sustain operations, retain buyers, and successfully pivot their exports during this challenging period.
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