Sensex Slides 600 Points, MSMEs Face Export Jitters as Global Tensions Rise

The Indian equity market witnessed a jolt on Friday as the Sensex nosedived nearly 600 points and the Nifty plunged below the 24,600 mark, with global tensions and renewed U.S. trade measures shaking investor sentiment. But behind the numbers lies a deeper concern—how India’s MSME sector, particularly export-driven units, may be bracing for yet another storm.

The Market Fallout

On the surface, the data is loud and clear: the Sensex fell 585.67 points (0.72%) to close at 80,599.91, while the Nifty declined 203 points (0.82%) to settle at 24,565.35. This marked the lowest level in nearly two months. Market laggards included Tata Steel, Maruti Suzuki, Tata Motors, Infosys, Bharti Airtel and Tech Mahindra—all of which have strong global or export-linked footprints.

But for thousands of MSMEs that form the backbone of India’s manufacturing and export economy—especially those in metal processing, auto components, pharmaceuticals, and IT services—the bigger hit may not just be market sentiment. It’s global uncertainty bleeding into balance sheets.

Trump's Tariff Shock and the Export Domino

At the centre of the storm is U.S. President Donald Trump’s new executive order—‘Further Modifying the Reciprocal Tariff Rates’—that imposes a 25% “Reciprocal Tariff, Adjusted” on exports from India, along with nearly 70 other countries. While large corporations may eventually absorb or pass on these costs, Indian MSMEs, many of whom operate with razor-thin margins and limited buffers, find themselves exposed.

From small auto parts makers in Faridabad to precision steel exporters in Ludhiana and mid-sized pharma units in Hyderabad, these new tariffs spell a rise in input costs, delays in contracts, and tighter cash flows. In an already competitive export market, price sensitivity is everything. A 25% surcharge, unless compensated through subsidies or strategic pricing, could make Indian goods less attractive in the U.S. market.

MSMEs Struggling Amid a Perfect Storm

Trump’s tariff announcement comes on the back of sustained Foreign Institutional Investor (FII) selling—₹5,588.91 crore worth of equities were dumped on Thursday alone—signalling capital flight and tightening liquidity in domestic markets. For MSMEs seeking funding for expansion or working capital, this could mean higher borrowing costs and increased dependence on government credit schemes.

Adding to the chaos is the global market weakness. Most major Asian indices traded in the red, following Wall Street’s decline. India’s own volatility index (India VIX) surged nearly 4%, indicating investor anxiety. And sectors where MSMEs dominate—especially pharma—saw sharp corrections. The Nifty Pharma index slumped over 3%, its third straight day of decline, with Sun Pharma, Lupin, Aurobindo Pharma, and others bleeding value.

This came after Trump sent letters to 17 global drug manufacturers demanding lower drug prices in the U.S., with a threat of enforcing Most Favoured Nation pricing policies. Indian pharma MSMEs, often suppliers or contract manufacturers for these giants, may face price renegotiations and order slowdowns.

Is There Light at the End of the Tunnel?

Despite the fall, technical analysts still hold some hope. Nifty’s current support rests at 24,400–24,450, and a breach could trigger further downside. But if it holds, a bounce-back is possible, with resistance levels around 24,600–24,850.

However, for MSMEs, technical charts offer little comfort. The real challenge lies in navigating a global economy that’s turning increasingly protectionist and unpredictable. Policy clarity, targeted support, and improved access to global markets will be critical to shielding small exporters from getting trampled under macroeconomic tremors they didn’t cause.

What MSMEs Need Now

At this juncture, Indian MSMEs need more than resilience—they need strategic support. From faster GST refunds to a relook at India’s own tariff diplomacy, a coordinated policy approach is essential. Market-linked credit instruments, flexible export schemes, and tax relief for affected industries could help MSMEs weather the impact.

While Trump’s latest move may not be the final blow, it’s a clear reminder that Indian MSMEs can no longer afford to be reactive players in global trade. It’s time they are equipped not just to survive—but to lead.