Tariff War Threatens Rs 21,800 Crore In MSME And Mid-Corporate Loans: Ind-Ra Report

(MENAFN- KNN India) New Delhi, Apr 30 (KNN) A recent report by India Ratings has highlighted that loans amounting to Rs 21,800 crore, extended to high-risk micro, small, and medium enterprises (MSMEs) and mid-sized corporates, are under threat due to worsening operating conditions amid escalating global trade tensions.

The study, which analysed 1,898 MSMEs and 1,055 mid-sized companies, reveals that MSMEs, particularly in sectors like chemicals, textiles, steel, and industrial machinery, are increasingly vulnerable.

Approximately 6 per cent of these MSMEs are classified as high-risk, characterised by an interest coverage ratio below 1.1 times and leverage exceeding five times.

These high-risk MSMEs collectively hold outstanding debt of around Rs 8,100 crore, representing 16 per cent of the total debt among the MSMEs surveyed.​

In contrast, mid-sized corporates exhibit relatively stronger financial buffers, with only 5 per cent falling into the high-risk category. However, a sustained slowdown in demand could still pose significant challenges for these entities.​

The report underscores the need for prudent risk assessment and credit allocation by lenders, especially in light of the current global economic uncertainties.

It also highlights the importance of supportive policy measures to bolster the resilience of MSMEs, which are crucial to India's economic fabric.​

As the tariff war continues to impact global trade dynamics, stakeholders are urged to monitor the financial health of vulnerable sectors closely and implement strategies to mitigate potential risks associated with loan exposures.

(KNN Bureau)

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