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4w ago

CRISIL Warns 50% U.S. Tariffs Will Squeeze Indian MSME Exporters From Aug. 27

The agency says partial price absorption will compress already thin margins, eroding competitiveness for key MSME-led export sectors.

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Overview

  • An additional 25% U.S. duty taking affected tariffs to 50% from August 27 will hit MSMEs that account for about 45% of India’s exports, CRISIL Intelligence reported.
  • Textiles, gems and jewellery, and seafood make up roughly a quarter of India’s exports to the U.S., with MSMEs holding over 70% share in these sectors, while chemicals face risk with about 40% MSME participation.
  • CRISIL highlights sharp pressure in readymade garments, where effective U.S. duties could reach 61%, disadvantaging clusters like Tirupur versus Bangladesh and Vietnam at around 31%.
  • Diamond-focused MSMEs in Surat, which handle over 80% of India’s diamond exports, are flagged as vulnerable given the U.S. takes nearly a third of Indian diamond shipments, and seafood exporters face tougher competition from Ecuador taxed at about 15%.
  • Pharmaceuticals, comprising roughly 12% of India’s U.S.-bound exports, are currently exempt, steel exposure is seen as negligible, and mitigation could come from redirecting shipments and leveraging the UK FTA plus a potential EU pact.