In light of the recent US tariff hikes on select Indian exports, leading MSME industry bodies have appealed to the Reserve Bank of India (RBI) to extend the Emergency Credit Line Guarantee Scheme (ECLGS). The appeal aims to cushion small and medium enterprises from potential disruptions in trade and cash flow caused by rising export costs and market uncertainties.
Key Highlights
- Tariff Shock: The US has imposed higher import duties on several categories of Indian goods, particularly textiles, engineering products, and handicrafts, which form a major part of India’s MSME exports.
- ECLGS Extension Demand: Industry representatives have urged the RBI to continue the ECLGS, which provided guaranteed credit support to MSMEs during the pandemic, citing it as a vital liquidity mechanism.
- Export Strain: Many MSME exporters face thinner profit margins and delayed payments due to the tariffs, threatening job security and production stability.
- Sectoral Concerns: Associations such as FISME and Laghu Udyog Bharati have highlighted that working capital support is essential for maintaining competitiveness and fulfilling international orders.
- Policy Support Request: Along with credit relief, industry bodies are seeking interest subvention, easier loan restructuring norms, and targeted export incentives from the government.
Who Should Take Action – Specific Advice
MSME exporters should engage with their banks to explore available credit guarantees and ensure timely renewal of working capital limits. Business associations are encouraged to coordinate with state-level MSME departments to push for additional fiscal support. Exporters should also diversify markets to mitigate risks from country-specific tariffs.
India Advocacy Insight
The US tariff move has reignited conversations around trade resilience and credit accessibility for MSMEs. Extending the ECLGS could act as a timely buffer, allowing small businesses to sustain operations, protect employment, and maintain India’s export momentum. Strategic credit and policy support from the RBI may determine how well India’s MSME sector weathers this global trade disruption.
