The Union Finance Ministry is in the final stages of preparing a credit support scheme for micro, small and medium enterprises (MSMEs) affected by the recent 50% import tariffs imposed by the United States. According to government sources, the relief plan is expected to be rolled out by next month to assist exporters struggling with the tariff impact.
The new scheme is likely to offer credit guarantees for MSME exporters availing loans up to Rs 100 crore, providing much-needed liquidity to firms facing declining orders from the US.
Credit Guarantee Modelled on MCGS
Officials said the proposal could be modelled on the Mutual Credit Guarantee Scheme (MCGS), which was launched in January 2025 for the manufacturing sector. However, the new version will come with simplified terms to make it more accessible to exporters.
Under the MCGS, the National Credit Guarantee Trustee Company Limited (NCGTC) currently provides a 60% guarantee coverage to lenders for loans up to Rs 100 crore. The scheme applies to loans used for purchasing equipment and machinery, with borrowers contributing 5% upfront. There is no guarantee fee in the first year, followed by a 1.5% fee for the next three years and 1% thereafter.
Officials indicated that some of these terms could be relaxed under the exporters' scheme due to the heavy tariff burden faced by Indian industries.
Sectoral Concerns and Government Consultations
Export associations representing leather, carpet, shrimp and textile sectors have held several meetings with the Ministry of Finance to seek immediate relief. These industries are among the hardest hit by the US tariff measures, which have significantly affected profit margins and export competitiveness.
"We have held multiple meetings and we want the benefits to go to exporters in the right manner," a senior government official said.
Tariff Impact and Broader Trade Context
Commerce Secretary Rajesh Agarwal recently noted that the effects of the steep US tariffs would become more visible from September to October 2025, even though overall exports to the US remain positive in cumulative terms.
Meanwhile, Commerce and Industry Minister Piyush Goyal expressed optimism about a potential India-US trade agreement, stating that discussions between the two sides were progressing well and could result in a deal "in the near future."
Trade Deficit Widens to 13-Month High
India's merchandise trade deficit widened to a 13-month high of $32.15 billion in September 2025, driven largely by higher gold and silver imports and a decline in exports to the US following the tariff hike announced by President Donald Trump earlier this year.
The upcoming credit guarantee scheme is seen as a crucial step to stabilise MSME exports, provide credit relief, and encourage market diversification at a time when global trade headwinds are testing India's export resilience.
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