Union Cabinet Likely to Clear ₹25,000 Crore Support Package for MSMEs

The Union Cabinet is expected to approve a financial support package for micro, small and medium enterprises (MSMEs) later today, as the government looks to shield the sector from the impact of rising tariffs in the United States. Sources suggest the relief measures will include credit guarantees, easier access to loans, and steps to expand export opportunities for labour-intensive industries.

Focus on Vulnerable Sectors

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The sharpest impact of the 50% U.S. tariffs has been felt by exporters in sectors such as textiles, apparel, gems and jewellery, leather, footwear and chemicals. These industries, which employ millions across India, have seen their competitiveness weaken in overseas markets.

According to government insiders, the proposed package will be part of the ₹25,000 crore Export Promotion Mission announced in the Union Budget for 2025–26. The scheme is designed to provide affordable credit, improve market access, and soften the blow of high tariffs. Officials are also evaluating whether direct income support can be provided to MSME workers affected by the duties, though the contours of such a plan are still under discussion.

A senior official explained that the government is conducting assessments on the scale and structure of such a direct-support programme. “The idea is being considered right now. We need to examine how the incentive would roll out and what level of support can realistically be offered,” the person noted.

Credit Support Under the RBI Scheme

The Reserve Bank of India is also expected to step in with measures that would make it easier for small enterprises to secure loans. Reports indicate that the central bank may soon increase the ceiling for collateral-free loans under the Credit Guarantee Scheme (CGS) from the current ₹10 lakh to ₹20 lakh.

The CGS, which has been in place since 2010 and is managed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), provides lenders with 75–90% coverage of outstanding amounts in case of default. An expansion of this scheme would directly benefit micro and small firms struggling to secure funding in today’s challenging trade environment.

Industry Seeks Swift Action

Last week, representatives from the Federation of Indian Export Organisations (FIEO) met Finance Minister Nirmala Sitharaman to outline their concerns. They stressed that exporters are grappling not just with market access issues, but also with the knock-on effects of declining competitiveness and slower job creation.

FIEO President S. C. Ralhan urged the government to move quickly. “Exporters need calibrated and timely measures to offset the strain of tariffs. Without immediate action, the sector’s ability to sustain growth and employment generation will be compromised,” he said.

Conclusion

The proposed Cabinet package signals the Centre’s intent to protect small businesses at a time when global trade tensions are mounting. By extending credit guarantees, boosting loan access and considering income support, the government is aiming to cushion one of India’s most vital sectors. If cleared, the measures will offer both financial relief and greater resilience to MSMEs in navigating external shocks.