Finance ministry to review US tariff impact on MSME sector on Monday

DFS secy to meet PSBs to assess credit flow

The Ministry of Finance is scheduled to hold a review meeting on Monday with public-sector banks (PSBs) to assess the impact of the punitive tariffs by the United States (US) on the micro, small, and medium enterprises (MSME) sector and evaluate their credit requirements, a senior government official said on condition of anonymity. 

The meeting will be chaired by Department of Financial Services (DFS) Secretary M Nagaraju. 

“The review will focus on financial inclusion schemes, such as MUDRA and credit guarantee, among others. The aim is to understand how external trade pressures are affecting MSMEs and to ensure that adequate credit support continues under existing government initiatives,” said the official. 

The government is also concerned that non-performing assets (NPAs) for MUDRA loans could rise due to higher tariffs, the official said, adding that the DFS would review the situation and seek suggestions from bankers on possible corrective measures. 

India’s MSMEs, which contribute over 45 per cent to the country’s exports, are facing major disruptions following the US decision to impose an additional 50 per cent tariff on the country’s goods. MSME industry bodies have raised concerns over its deep impact, seeking immediate government intervention. 

An email sent to the ministry didn’t elicit any response until press time.

 

The official said the disbursement target under the Pradhan Mantri MUDRA Yojana for FY26 had been set at ₹2.4 trillion, of which ₹99,064 crore had been disbursed until September, accounting for about 42 per cent of the total annual target. 

Vinod Kumar, president of the India SME Forum, said the steep tariff hike could lead to an annual business loss of over $30 billion, with MSMEs being the hardest hit due to their limited financial buffers and capacity constraints. 

The official added that the meeting was also likely to discuss the progress of the microcredit schemes PM SVANidhi and PM Vishwakarma schemes. “The meeting is also expected to review the status of inoperative accounts under the Pradhan Mantri Jan Dhan Yojana, as banks have been directed to reduce their number through various saturation drives,” the official said. 

Discussions are also likely to cover the progress of Business Correspondents. “The meeting is also likely to see the progress of opening of bank branches in the north-eastern region,” the official added. 

The meeting will further assess the performance of the New Credit Assessment Model for MSMEs, launched in March. “The model leverages digitally fetched and verifiable data to enable automated MSME loan appraisal. Benefits to MSMEs include straight-through processing, reduced turnaround time, and decision-making based on objective data. However, as of July, PSBs have sanctioned only ₹11,994 crore under the model, which will also be reviewed in the meeting,” the official said. 

On the agenda

• Review will focus on financial inclusion schemes such as MUDRA, credit guarantee programmes, etc
• Aim is to understand how external trade pressures are affecting the sector and ensuring adequate credit support
• Govt also concerned that NPAs for MUDRA loans may rise due to impact of higher tariffs
• Likely to discuss progress of micro-credit schemes PM SVANidhi and PM Vishwakarma 
• May also take up progress in opening of bank branches in the Northeast