Centre considering ‘direct-income support’ for MSME workers impacted by Trump’s tariffs

The Centre is considering a ‘direct-income support’ for the employees of micro, small & medium enterprises (MSMEs) impacted by Trump’s tariffs, a senior government official has told Moneycontrol.

"The idea is being considered right now, we have to do an assessment of the incentive how it roll-out…what amount would be provided," one government official told Moneycontrol, adding that the support may be implemented in the coming months.

"Indirect support through credit-guarantees and raising collateral-free loan limit may be rolled out first," the official said.

The central government has lined up a support package worth Rs 25,000 crore under the Export Promotion Mission, announced in Union Budget 2025-26, aimed at providing affordable credit, better market access for exports, and to cushion from the adverse impact of high tariffs.

"The Union Cabinet will have to approve the package, that’s likely in the coming weeks," the official said.

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Moneycontrol had on August 12 reported that the Reserve Bank of India (RBI) may enhance the limit of collateral-free loans for micro & small enterprises (MSEs) to Rs 20 lakh from Rs 10 lakh under the Credit Guarantee Scheme (CGS) by the end of this month or early September.

The CGS, managed by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) - introduced in 2010 - seeks to assure lenders that in the event of an MSE unit that availed collateral-free credit facilities fails to pay back, the trust would pay 75-90 percent of the outstanding amount.

On August 28, a delegation of exporters represented by the Federation of Indian Export Organisations (FIEO) met Finance Minister Nirmala Sitharaman to apprise her of the challenges following the escalation of tariffs.

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FIEO highlighted the immediate concerns of the exporting community, particularly the adverse impact of tariffs on market access, competitiveness and job creation. FIEO’s President SC Ralhan said exporters need a quick and calibrated measure to mitigate the strain of tariffs, as they are key to growth and employment generation.

"The Finance Minister reassured the delegation that the government stands firmly behind Indian exporters in this hour. She emphasized that the Government is committed to addressing all concerns of the exporting community and will explore every possible avenue to safeguard their interests," a statement by FIEO said.