MSMES UNDER STRAIN

The US' additional tariffs are likely to hit the Indian MSME sector the hardest. Stakeholders are looking at incentives to protect their businesses

- SINDHU BHATTACHARYA

THE PUNITIVE ADDITIONAL 25% tariff imposed by US President Donald Trump on India will hurt a swathe of Indian businesses, with particularly devastating impact on small businesses. India's merchandise exports to the US-India's largest trading partner-were worth $87 billion last fiscal (FY25).

Estimates suggest that about 70% of this trade is likely to be severely impacted due to the fresh tariffs, with only exports of pharmaceuticals, smartphones, and petroleum products exempt as of now. Exports to the US form a major share (greater than or equal to 5%) in India's total export pie for more than 100 product categories.

Small businesses will likely see a major impact, with sectors such as garments and textiles, gems & jewellery, leather and fisheries, already struggling to contain the damage.

In the Surat diamond hub, skilled workers engaged in cutting and polishing rough diamonds are struggling with falling incomes due to diminished demand. The latest tariff blow is expected to further worsen their earnings.

The Regional Chairman (Gujarat) of the Gems & Jewellery Export Promotion Council, Jayanti Savaliya, pointed out that artisans' income could fall by as much as 35-40% due to the latest tariff. “The entire diamond supply structure has been disrupted due to the high tariffs and this will eventually hurt both, skilled and unskilled workers and their incomes,” Savaliya says.