After US tariffs, war on Iran deepens MSME stress

MSMEs, accounting for about 45% of India’s total exports, any prolonged instability threatens not just margins but order continuity.“We are fortunate that our goods are not stuck in transit,” said Sushma Morthania, director at Shezar Technologies, which exports electronic components worth around ₹50 lakh each month. Nearly 40% of her shipments go to West Asia, Europe, and parts of Latin America via Dubai’s Jebel Ali Port.

She said some buyers placed orders on hold for at least a week ahead of the conflict, adding that storage constraints make it costly for smaller firms to hold finished inventory.Industry body India SME Forum, representing about 97,000 MSMEs, estimated that a week-long disruption could affect export orders worth around ₹8,500 crore, equivalent to roughly 13% of the country’s monthly non-oil exports.“Along with higher freight and insurance costs, this could hit MSMEs hard,” said Vinod Kumar, president of the forum. He warned that if disruptions persist beyond three months, exporters could face 10-20% order cancellations, inventory pile-ups and potential job losses of 100,000-200,000 workers in export clusters, given the limited diversification options available to smaller firms.Sectors such as engineering are also seeing costs rise due to the war.

“The war threatens to erode our competitiveness due to rising logistics and insurance costs. The overall situation seems very volatile.

Trade disruptions in this region, particularly in the UAE (United Arab Emirates) and Saudi Arabia, are significantly affecting our shipments. All the factors combined are set to increase input cost, thus putting further strain on our revenue and profitability,” said Pankaj Chadha, chairman, Engineering Export Promotion Council