Indian MSME non-performing assets may rise slightly to 3.7%-3.9% by March 2026 due to falling U.S. exports and higher tariffs, despite overall improvement since 2021.

Indian MSME non-performing assets may slightly rise to 3.7%-3.9% by March 2026 due to global trade pressures, especially a 16.3% August 2025 drop in exports to the U.S. triggered by doubled tariffs. Despite this, the sector’s gross NPA ratio improved from 8.7% in 2021 to 3.6% in 2025, supported by policy reforms, RBI frameworks, and pandemic relief measures. Advances to MSMEs grew from ₹16.98 lakh crore in 2020 to ₹28.05 lakh crore by 2024, with continued declines in NPAs through December 2024.