The package’s objectives are to improve exporters‘ access to markets, provide reasonably priced loans, and protect against the negative effects of high tariffs.
Sources believe that later today, the Union Cabinet will adopt a financial-support package for MSMEs to assist them offset the effects of hefty US tariffs.
Cabinet Plans MSME Support
As they look for further steps to provide protection for labor-intensive industries, the Cabinet may also adopt credit-facilitation measures that would give the government with an improved loan guarantee for MSME loans.
The industries most at risk from US tariffs, which are now at 50%, include textiles, clothing, jewelry and gems, leather and footwear, chemicals, and more.
The federal government’s Export Promotion Mission has developed an aid package of Rs 25,000 crore, as per the Union Budget 2025–2026. This package aims to improve market access for exports, provide affordable credit, and protect against the negative effects of high tariffs. Moneycontrol reported this information on August 28.
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RBI May Boost MSME Loans
Additionally, a senior source told Moneycontrol that the Center is considering providing “direct-income assistance” to workers at MSMEs affected by Trump’s tariffs. The official had previously told Moneycontrol, “The notion is being studied right now, we have to perform an evaluation of the incentive how it roll-out what much would be supplied.”
On August 12, Moneycontrol also stated that by the end of this month or the beginning of September, the Reserve Bank of India (RBI) may increase from Rs 10 lakh to Rs 20 lakh the maximum amount of collateral-free loans that micro as well as small companies (MSEs) may be getting under the Credit Guarantee Scheme (CGS).
FIEO Highlights Tariff Impact
Established in 2010, the Loan Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) oversees the CGS, which aims to reassure lenders that, should an MSE unit that used collateral-free loan facilities default, the trust would cover 75–90% of the remaining balance.
To inform her of the difficulties resulting from the increase in tariffs, a group of exporters, represented by the Federation of Indian Export Organizations (FIEO), met with Finance Minister Nirmala Sitharaman last week.
FIEO brought attention to the pressing issues facing the exporting community, especially the negative effects of tariffs on competitiveness, market access, and job development. Since exporters are essential to economic development and job creation, FIEO President SC Ralhan said that they need a prompt and well-balanced response to lessen the impact of tariffs.