India’s MSMEs Face Margin, Competitiveness Pressure From US 50% Tariff: CRISIL

New Delhi, Sep 23 (KNN) The US tariff hike on Indian products to 50 per cent is expected to put significant pressure on India’s micro, small and medium enterprises (MSMEs), which account for around 45 per cent of the country’s total exports, according to CRISIL Intelligence.

The US had imposed an additional 25 per cent tariff on Indian goods from August 27, 2025, taking the overall tariff to 50 per cent. CRISIL said the higher duties are likely to squeeze MSME margins and weaken their competitiveness in the US market.

Textiles, Gems And Jewellery Among Most Exposed

Textiles, gems and jewellery and seafood, which together account for around 25 per cent of India’s exports to the US, are among the sectors expected to face the sharpest impact. MSMEs account for more than 70 per cent of units in these sectors.

In ready-made garments, Indian exporters could lose ground to competitors such as Bangladesh and Vietnam, which face lower tariffs, reported Business Standard.

CRISIL said the Tirupur cluster, which accounts for more than 30 per cent of India’s ready-made garment exports, is particularly exposed, with around 30 per cent of its exports going to the US.

Surat Diamond Industry Faces Tariff Pressure

Gems and jewellery is another highly exposed segment, with Surat playing a major role in India’s diamond export industry.

Diamonds account for more than half of India’s gems and jewellery exports, while the US is a major market for Indian diamonds. CRISIL expects export volumes to come under pressure, although higher gold prices and domestic demand could partly offset the impact on revenues.

Seafood MSMEs are also expected to face stronger competition, particularly from Ecuador, which has a lower tariff burden in the US market.

Chemicals, Auto Components Also Vulnerable

The chemicals sector could face stronger competition from exporters in Japan and South Korea, where tariff conditions are comparatively more favourable.

Auto-component MSMEs could also see an indirect impact, particularly suppliers of gearbox and transmission equipment with significant US exposure. CRISIL expects the overall impact on the sector to be marginally unfavourable.

Steel MSMEs Likely To See Limited Impact

The impact on steel MSMEs is expected to be relatively limited because most smaller units are involved in re-rolling and long products, while the US primarily imports flat steel products from India.

CRISIL said the tariff impact across textiles, chemicals, seafood and auto components could affect exports worth around USD 19 billion, although growing domestic demand and opportunities in other markets could provide some mitigation.

The report said Indian exporters can reduce their exposure by diversifying into other markets and leveraging trade agreements, including the India-UK free trade agreement, while improving competitiveness and exploring new export opportunities.

(KNN Bureau)