Explore the Centre’s ₹25,000 crore support package for MSME workers impacted by Trump’s 50% tariffs in 2025. Learn about direct-income support, credit schemes, and market strategies as of August 28, 2025.
As of 11:44 PM IST on Thursday, August 28, 2025, the Indian government is stepping up to shield its micro, small, and medium enterprises (MSMEs) from the fallout of US President Donald Trump’s 50% tariffs, imposed on August 27, 2025. These tariffs, targeting India’s $50 billion Russian oil imports, threaten the livelihoods of millions of MSME workers and exporters. In response, the Centre is considering a groundbreaking direct-income support scheme, alongside a robust ₹25,000 crore support package under the Export Promotion Mission, as reported by Moneycontrol on August 28, 2025, by Priyansh Verma and Shweta Punj.
With India’s export sector facing a potential $8.5 billion hit (Source: Moneycontrol, August 28, 2025), and the Union Cabinet poised to approve this package in the coming weeks, this move signals a proactive stance. This blog unpacks the government’s strategy, the tariff’s impact, and what it means for workers, exporters, and investors, drawing from insights by the Finance Ministry, RBI, and FIEO. Whether you’re an MSME stakeholder or a market watcher, this update is crucial.
The Tariff Crisis: What’s Happening?
Trump’s Tariff Escalation
On August 27, 2025, the US hiked tariffs on Indian goods from 25% to 50%, a decision driven by concerns over India’s discounted Russian oil imports. This escalation targets key sectors like textiles, seafood, and jewelry, with tariff rates jumping to 63% on textiles.
Impact on MSMEs
India’s MSME sector, employing over 110 million people and contributing 30% to GDP, depends heavily on US exports worth $86 billion last year. The new tariffs could slash this by 43%, putting 1.5 million jobs at risk, especially in export hubs like Tirupur and Surat.
Example: A Tirupur textile unit reported a $2 million order cancellation, leading to 200 job cuts.
Centre’s Response: Direct-Income Support and ₹25,000 Crore Package
Direct-Income Support Proposal
A senior government official revealed that the Centre is considering direct-income support for MSME workers affected by the tariffs. “The idea is under review; we need to assess the rollout and the amount to be provided,” the official noted, suggesting implementation in the coming months. This could involve cash transfers similar to existing welfare schemes.
₹25,000 Crore Export Promotion Mission
Announced in the Union Budget 2025-26, this package aims to:
- Affordable Credit: Boost liquidity for MSMEs.
- Market Access: Open new export opportunities.
- Tariff Cushion: Offset the 50% tariff impact.
The Union Cabinet is expected to approve this in the coming weeks, with initial focus on indirect support like credit guarantees.
RBI’s Credit Guarantee Scheme (CGS) Boost
The Reserve Bank of India is set to raise the collateral-free loan limit for micro and small enterprises (MSEs) from ₹10 lakh to ₹20 lakh by early September 2025. This scheme, covering 75-90% of defaults, will ease lender risks and support MSEs.
Economic and Social Implications
Export Sector Strain
The tariff hike could lead to an $8.5 billion export loss, with diamond and jewelry makers already scouting new markets like the UAE and Singapore. This might reduce MSME contributions to GDP by 2-3% in 2025-26.
Job Security Concerns
With 1.5 million jobs at stake, Finance Minister Nirmala Sitharaman met a delegation of exporters from the Federation of Indian Export Organisations (FIEO) on August 28, 2025. She assured support to protect workers’ livelihoods amid global challenges.
| Sector | Export Value ($B, 2024) | Potential Loss ($B) | Jobs at Risk (Million) |
|---|---|---|---|
| Textiles | 25 | 10.5 | 0.6 |
| Seafood | 15 | 7.8 | 0.4 |
| Jewelry | 20 | 9.2 | 0.3 |
| Furniture | 12 | 5.6 | 0.2 |
Expert Reactions and Next Steps
FIEO’s Stance
FIEO President SC Ralhan called for “quick and calibrated measures” to sustain export growth and jobs, praising the Finance Minister’s commitment to support the sector.
Economic Analysts
Experts suggest that direct-income support could stabilize workers, but swift execution is critical. The ₹25,000 crore package may boost market confidence if rolled out promptly.
Upcoming Actions
The Cabinet’s approval in the coming weeks will clarify fund allocation, while the RBI’s CGS enhancement offers immediate relief.
Opportunities for Stakeholders
For MSMEs
- Credit Access: Utilize the new ₹20 lakh CGS limit.
- Market Diversification: Target Africa and Latin America.
- Government Aid: Await direct-income support details.
For Investors
- Stock Picks: Textiles and jewelry stocks like Page Industries may dip but offer value.
- Mutual Funds: Start SIPs in export-focused funds.
- Bonds: Consider government bonds for stability.
FAQs
- What is direct-income support for MSME workers? A proposed cash transfer scheme to offset income losses due to tariffs, with details pending.
- How will the ₹25,000 crore package help? It provides credit, market access, and tariff relief for MSMEs.
- Which sectors are most affected? Textiles, seafood, jewelry, and furniture face the biggest hit.
- When will the Cabinet approve the package? Likely within weeks from August 28, 2025.
- Should investors worry? Short-term dips are expected, but long-term opportunities exist in resilient sectors.
As of 11:47 PM IST on August 28, 2025, the Centre’s consideration of direct-income support and a ₹25,000 crore Export Promotion Mission offers hope against Trump’s tariffs. With the RBI’s CGS boost and FIEO’s advocacy, MSME workers and exporters have a safety net. Investors should watch for dips in export stocks while diversifying. Stay tuned for government updates and act now to secure your financial future!