The Engineering Export Promotion Council (EEPC) India has urged the government to take immediate steps to protect micro, small, and medium enterprises (MSMEs) impacted by the United States’ recent imposition of tariffs on Indian goods. The tariffs, which came into effect on August 27, have heightened concerns about cost pressures, market concentration, and credit downgrades for Indian exporters.
Tariffs heighten cost burden for MSMEs
MSMEs in the engineering sector are already grappling with high input costs and financing challenges. EEPC Chairman Pankaj Chadha emphasised that smaller exporters are disproportionately affected by global policy shifts and need tailored support. He called for the introduction of interest equalisation schemes, which would reduce the cost of capital for MSMEs currently facing interest rates upwards of 9 percent. Lowering this burden is seen as essential to maintaining India’s export competitiveness.
The EEPC also flagged the potential for credit downgrades by rating agencies due to a sudden decline in US-bound shipments. The council urged agencies to exercise caution and avoid penalising MSMEs over short-term trade policy changes that are beyond their control.
Diversifying export markets through FTAs
To reduce overreliance on a single export destination, the EEPC has advocated for accelerated free trade agreements (FTAs) with Latin American countries such as Chile, Peru, and Mexico. Duty-free access to these regions could offer Indian exporters significant strategic advantages and help offset the risks arising from tariff impositions by the US.
The council also pointed to opportunities in West and North Africa, suggesting that broad-based market access strategies will be essential for long-term resilience. This diversification is aligned with India’s wider vision of becoming a global manufacturing and export hub.
Strategic push from leadership
At EEPC India’s platinum jubilee celebrations, President Droupadi Murmu underscored the importance of turning global disruptions into opportunities. She called for innovation, resilience, and strategic positioning to drive India’s economic future.
Commerce and Industry Minister Piyush Goyal also addressed the event, noting the remarkable growth of India’s engineering exports—from USD 10 million in 1955 to USD 116 billion in FY 2024–25. He urged import-dependent industries to shift sourcing to domestic producers and affirmed the government’s commitment to supporting MSMEs through favourable policy frameworks.
A critical juncture for MSME exports
The EEPC’s appeal highlights the urgent need for collaborative policy action to prevent long-term damage to India’s export backbone. With MSMEs accounting for a substantial share of employment and manufacturing output, their resilience is key to sustaining India’s global trade momentum.
As the government weighs its response to the tariff impact, industry stakeholders are hopeful that a combination of financial relief, market diversification, and diplomatic negotiations will help safeguard India’s standing in the international export ecosystem.