The Finance Ministry is finalising a credit support scheme for micro, small and medium enterprises (MSMEs) impacted by the steep 50% US tariffs, which is expected to be rolled out by next month, according to sources.
To aid exporters facing losses and help them diversify into new markets, the Centre may soon announce a credit guarantee programme for MSME exporters availing loans of up to Rs 100 crore. The proposed scheme could be modelled on the Mutual Credit Guarantee Scheme (MCGS) launched in January 2025 for the manufacturing sector but with simplified terms.
Some of these conditions could be eased under the proposed exporters’ scheme, given the heavy tariff impact on Indian goods. Associations representing sectors such as leather, carpets, shrimp and textiles have reportedly held multiple rounds of discussions with the Ministry of Finance, seeking urgent intervention.
“We have held multiple meetings and we want the benefits to go to exporters in the right manner,” a government official told BT.
The MCGS currently provides a 60% guarantee coverage by the National Credit Guarantee Trustee Company Limited (NCGTC) to member lending institutions for credit facilities up to Rs 100 crore. The coverage applies to loans for equipment or machinery purchases, with an upfront contribution of 5% of the loan amount at the time of guarantee application. The guarantee fee is nil in the first year, followed by 1.5% per annum for the next three years and 1% thereafter.
Commerce Secretary Rajesh Agarwal recently stated that the tariff impact would begin reflecting from September–October, noting that while affected industries are struggling, exports to the US remain cumulatively in the green.
Meanwhile, Commerce and Industry Minister Piyush Goyal on Thursday expressed optimism that a trade deal with the US could materialise in the “near future”, adding that talks between the two sides were progressing well.
India’s merchandise trade deficit widened to a 13-month high of $32.15 billion in September, driven by gold and silver imports and a drop in exports to the US following President Donald Trump’s up to 50% tariffs on Indian goods.
