MSMEs in textiles, diamonds, chemical substances to be most hit by U.S. tariffs: CRISIL Intelligence

“The imposition of upper tariffs by the U.S. will considerably impression the Micro, Small and Medium Enterprise (MSME) sector, which accounts for round 45% of India’s exports, whereas MSMEs in textiles, diamonds and chemical substances are more likely to be probably the most hit,” a report by CRISIL Intelligence stated.

“The U.S. levies advert valorem obligation of 25% on Indian items. However, it has imposed a further 25% tariff which shall be efficient from August 27 this 12 months. This brings the whole tariffs to 50%, which may have a significant impression on a number of sectors in India,” the report stated.

“Textiles, gems and jewelry, which account for 25% of India’s exports to the U.S., are more likely to be most affected. The MSMEs have greater than 70% share in these sectors and shall be hit onerous,” the report stated. Another sector which is more likely to face the warmth is chemical substances, the place MSMEs have a 40% share.

“The gems and jewelry sector at Surat in Gujarat, which dominates diamond exports, will really feel the tariff shock,” the report stated. “Diamonds account for greater than 50% of the nation’s gems and jewelry exports, and the U.S. is a significant client,” in accordance with the report.

In chemical substances too, India faces competitors from Japan and South Korea that are topic to decrease tariffs. In metal, the U.S. tariffs are anticipated to have a negligible impression on the MSMEs because the items are largely engaged in re-rolling and lengthy merchandise. The U.S. primarily imports flat merchandise from India.

In the textiles sector, the ready-made clothes are anticipated to lose floor within the U.S. in comparison with friends together with Bangladesh and Vietnam which face decrease tariffs.