The World MSME Forum has issued an urgent call for the Indian government to intervene diplomatically with Washington. This plea follows a shocking US legislative proposal that could impose tariffs as high as 500% on imports from India, a move industry leaders warn could trigger a severe economic crisis.
A $275 Billion Export Market Under Threat
The United States stands as India's most crucial strategic export destination. Combined merchandise and IT services exports to the US are estimated at a staggering nearly ₹23 lakh crore ($275 billion). According to Forum President Badish Jindal, this colossal figure represents approximately 36% of India's total global exports.
"At a 500% tariff rate, Indian goods become fundamentally unviable," Jindal stated. He revealed that the mere threat of these tariffs is already disrupting trade. American buyers are inserting protective 'get-out' clauses in their contracts, refusing to accept shipments if the punitive tariffs are enacted while goods are in transit.
The Geopolitical Trigger: Targeting Russia's Allies
The root of this potential trade disaster lies in the Sanctioning Russia Act of 2025. US President Donald Trump endorsed this bipartisan bill on January 8. The legislation mandates tariffs of at least 500% on imports from nations that continue purchasing Russian-origin petroleum and uranium, explicitly naming India, China, and Brazil.
While India has already faced increased tariffs since August 2025 due to its energy imports from Moscow, this new proposal is of a different magnitude. It is designed to leverage trade to cut off funding for Russia's military and could effectively halt major commercial engagement between India and the US.
MSMEs in Ludhiana and Beyond Feel Immediate Stress
The impact of the uncertainty is already visible on the ground, particularly in industrial hubs like Ludhiana. Key export sectors are reporting severe strain:
- Hosiery & Textiles: Factories are witnessing sharp declines in orders for both winter and spring-summer collections.
- Cycle Parts: Major manufacturers, including companies like Big Ben, report that up to 80% of their exports are currently stalled as buyers wait for clarity.
- Honey & Engineering: Small-scale units, which form the backbone of these industries, lack the financial cushion to absorb the high cost of this trade uncertainty.
Call for a Pragmatic Energy Policy Reassessment
The World MSME Forum has presented a stark choice to the government. It argues that while the benefits of discounted Russian oil are real, they are largely confined to large corporations. In contrast, MSMEs and millions of export-linked jobs face total collapse if the US tariff wall goes up.
Jindal highlighted India's unique vulnerability compared to China, which may be somewhat shielded by its dominance in rare earth minerals. "We must choose between the short-term gains of oil and the long-term survival of our manufacturing base," he emphasized.
The Forum has formally petitioned the Prime Minister's Office to seek a diplomatic resolution before the bill heads for a final vote in the US Senate next week. With the legislation poised for a potential bipartisan vote, Indian exporters are on edge. They fear a prolonged standoff could lead to widespread factory closures and large-scale job losses across the country, underscoring the urgent need for a negotiated solution to avoid being effectively shut out of its largest trading partner.
