India Unveils Multi-Layered MSME Shield to Counter Global Trade Uncertainty

As global markets swing between uncertainty and opportunity, India’s small businesses are quietly holding their ground.

From geopolitical tensions to supply chain disruptions and fresh tariff pressures from the United States, the global trade environment has grown increasingly complex. Yet, at the heart of India’s economy, Micro, Small and Medium Enterprises (MSMEs) continue to power exports, generate jobs, and fuel entrepreneurship across states. Recognising their central role in India’s growth story, the Union Government has now rolled out a comprehensive, multi-pronged strategy designed to strengthen MSMEs and shield them from global volatility.

In a written reply to Parliament, Minister of State for Micro, Small and Medium Enterprises, Shobha Karandlaje, outlined a broad policy and financial support framework aimed at reinforcing India’s MSME ecosystem amid mounting global uncertainty.

Exports Hold Steady Despite Global Headwinds

According to the Minister, India’s merchandise exports during April–October 2025 have demonstrated resilience despite challenging global conditions. Overall exports in the current fiscal remain positive compared to the previous year — a signal that Indian industry, particularly MSMEs, continues to adapt and diversify in the face of external pressures.

This performance comes at a time when global trade flows have been disrupted by geopolitical conflicts, economic slowdowns in key markets, and tariff measures introduced by the United States. That exports have remained steady underscores the structural strength and growing sophistication of India’s MSME sector.

But resilience alone is not enough. The government is moving proactively.

A Multi-Pronged Strategy to Counter Global Volatility

The Centre is adopting a layered approach to mitigate the impact of global uncertainty and U.S. tariff measures. Key elements of the strategy include:

• Intensive engagement with the U.S. Government toward a mutually beneficial India–US Bilateral Trade Agreement

• Trade relief measures by the Reserve Bank of India

• The Credit Guarantee Scheme for Exporters

• Next-generation GST reforms aimed at boosting domestic demand

• Targeted export promotion through the newly launched Export Promotion Mission (EPM)

• Expansion of Free Trade Agreements (FTAs) and improved utilisation of existing trade pacts

Together, these measures aim to cushion exporters, expand market access, and ensure MSMEs remain globally competitive.

Export Promotion Mission: A Focused Push for MSME Exports

Approved on November 12, 2025, the Export Promotion Mission (EPM) represents one of the government’s most structured attempts to strengthen the export ecosystem — with MSMEs at its core.

The mission operates through two major pillars:

NIRYAT PROTSAHAN

This component focuses on financial support, offering:

• Trade finance facilitation through interest subvention

• Factoring support

• E-commerce credit cards

• Collateral-free export credit for MSME exporters

NIRYAT DISHA

This pillar provides non-financial assistance such as:

• Export-quality compliance support

• Market access facilitation

• Logistics support

• Ecosystem development measures

The idea is simple yet strategic: ease financial stress while simultaneously building export capability.

Strengthening the Backbone: Credit, Equity and Infrastructure

Beyond exports, the government is reinforcing MSMEs through multiple flagship schemes that target credit access, equity infusion, technology adoption, and infrastructure development.

Prime Minister’s Employment Generation Programme (PMEGP)

Under PMEGP:

• Margin money subsidy of up to 35% in rural areas and 25% in urban areas is provided for special category beneficiaries.

• General category applicants receive up to 25% subsidy in rural areas and 15% in urban areas.

As of February 10, 2026, during FY 2025–26, 54,995 micro enterprises have been supported under the scheme. ₹2,150 crore has been disbursed as margin money subsidy, generating estimated employment for nearly 4.4 lakh people.

Uttar Pradesh, Andhra Pradesh, Tamil Nadu, Bihar, and Jammu & Kashmir have emerged as leaders in enterprise creation and job generation under PMEGP.

Credit Guarantee Scheme (CGS)

Access to credit remains one of the biggest challenges for MSMEs. Under the Credit Guarantee Scheme for Micro and Small Enterprises:

• Credit guarantee cover of up to ₹10 crore per borrower is provided.

• As of January 31, 2026, guarantees worth ₹3.39 lakh crore have been approved.

• Over 21.49 lakh MSME units have been covered.

Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and West Bengal rank among the top beneficiary states, highlighting strong nationwide uptake.

Self Reliant India (SRI) Fund

The ₹50,000 crore SRI Fund is designed as an equity infusion mechanism for growth-oriented MSMEs. A fresh ₹2,000 crore top-up has been announced in Budget 2026–27, strengthening its ability to back scalable enterprises that require patient capital rather than just loans.

Cluster-Based and Capital Investment Support

To promote collaborative growth and infrastructure creation:

• The Micro & Small Enterprises Cluster Development Programme (MSE-CDP) offers up to 80% grant support for Common Facility Centres and up to 70% grant for industrial estates.

• The Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) enables access to term loans of up to ₹100 crore for machinery and equipment purchases, backed by government guarantees.

These measures aim to modernise manufacturing units, improve productivity, and build globally competitive clusters.

A Nationwide Uptake Signals Confidence

The strong credit flow across states suggests confidence in both policy direction and MSME potential. With ₹3.39 lakh crore worth of credit guarantees approved and lakhs of enterprises supported under PMEGP, the support architecture is not just conceptual — it is actively operational.

The government has also indicated ongoing engagement with exporters, MSMEs, industry associations, Export Promotion Councils, and state governments to continuously assess evolving challenges and respond with timely interventions.

Building MSME Resilience in an Uncertain World

At a time when global markets are unpredictable, India’s MSME strategy appears anchored in diversification, credit expansion, export facilitation, and grassroots entrepreneurship.

The messaging is clear: India’s small businesses are not being left to navigate global turbulence alone. Through financial guarantees, export promotion, cluster development, and equity infusion, the government aims to ensure MSMEs remain central to economic growth, employment generation, and export expansion.

If global uncertainty defines the moment, resilience defines India’s MSMEs. And with a layered policy push now in motion, the sector is being positioned not just to survive global headwinds — but to emerge stronger from them.