Despite Donald Trump slapping 25% tariff on India, Indian MSME exporters say outlook remains positive

Even as the US President Donald Trump slaps an additional 25% tariff and an additional ‘penalty’ for purchasing Russian oil on goods imported from India from August 1, Indian medium and small-scale industries (MSMEs) are overall positive about their business prospects for the current year.

The latest round of MSME Outlook Survey published by Small Industries Development Bank of India (SIDBI) says only 40% of India’s MSME exporters are expecting to be affected directly or indirectly by ongoing tariff issues, at least immediately. Over half of manufacturing and trading MSMEs reported sales growth in Q1FY26, while 42% in services saw an increase and 48% 4 saw stable sales. Year-on-year, participants of the survey registered sales growth across all sectors, with around 60% expecting further growth in the quarter a year ahead.

According to the survey, exporting MSMEs have been impacted by US tariff uncertainties. Nearly 40% of the respondents, both in manufacturing and services sector, have been impacted- directly or indirectly- by the tariff uncertainties. However, nearly a fifth of the manufacturing entities are unsure of the impact of tariff uncertainties. In case of services sector, majority of the respondents, at 53%, have not been impacted by the tariff uncertainties.

In an official response to Trump’s tariff announcement against India, Commerce Ministry had stated that the government is studying its implications, and India remains committed to meaningful negotiations with the US to clinch a fair, balanced and mutually beneficial bilateral trade agreement. The ministry also said the government attaches utmost importance to protecting and promoting the welfare of farmers, entrepreneurs, and MSMEs.

Overall, the export turnover of respondent MSMEs improved markedly for the manufacturing sector between the current round and the previous round with 53% of respondents (exporters), indicating a sequential increase in sales. On year-on-year basis, the export sales also improved for manufacturing exporters with 57% respondents indicating increase in sales. However, the respondents in the sector appear to have subdued expectations one-year ahead with only 45% expecting a growth from the current levels, possibly indicating the uncertainty on the tariff front.

For services enterprises, 51% respondents confirmed increased sales vis-à-vis 64% in previous quarter. The one-year ahead expectations also appear to be relatively subdued with 38% of the respondents expecting an increase in sales. Nevertheless, 51% of the respondents in the service sector expect to retain the sales figures of the last quarter in the quarter a year ahead, the survey results indicate.