US Tariffs Threaten India's Affordable Housing Market
Explore how US tariffs on Indian exports could derail the recovery of India's affordable housing sector, impacting millions of potential homebuyers.
Affordable HousingUs TariffsMsmeReal EstateIndiaReal EstateAug 11, 2025
These small and medium enterprises — employing over 260 million people and contributing 30% to GDP and 45% to exports — are among the hardest-hit by the tariff shock. Many operate in labour-intensive export sectors such as textiles, engineering goods, auto components, gems and jewellery, and food processing, leaving their workers vulnerable to income cuts or job losses.
According to ANAROCK Research & Advisory, this spells serious trouble for the affordable housing segment, defined as homes priced at ₹45 lakh or less. Once the growth engine of India’s housing market, its sales share has plunged from 38% in 2019 to just 18% (34,565 units) in H1 2025 across the top seven cities. New launches in this category have also shrunk from 40% to 12% over the same period.
“This category was already gravely hit by the COVID-19 pandemic and is still struggling to find firm ground,” says Prashant Thakur, Executive Director – Research & Advisory, ANAROCK Group. “Trump's mercenary tariffs will snuff out even the dimmest ray of hope for this segment.”
The logic is simple: reduced export earnings for MSMEs translate into lower disposable incomes for millions of potential homebuyers in the lower-income bracket. Developers catering to this market will face slower sales, while housing finance companies could see both rising loan defaults and weaker disbursements.
MSME exports had been one of India’s success stories, expanding 228% in four years from 52,849 registered exporters in FY21 to 1,73,350 in FY25. The new tariffs risk reversing these gains and, in turn, stalling one of the largest pathways to homeownership for the economically vulnerable.
“If demand derails further, developers will curtail new launches, impacting the entire affordable housing ecosystem,” Thakur warns. “It’s not just a housing story — it’s an economic stability story.”
The government’s next moves on trade negotiations, fiscal cushions, and buyer-focused incentives could decide whether affordable housing remains a viable dream for millions or becomes an early casualty of a tariff war thousands of miles away.
Frequently Asked Questions
What is the impact of US tariffs on India's MSME sector?
The 50% US tariffs on Indian exports have hit the MSME sector hard, leading to potential income cuts and job losses for workers in export-oriented industries such as textiles, engineering goods, and auto components.
How are these tariffs affecting affordable housing sales?
The tariffs are reducing the disposable incomes of potential homebuyers, leading to slower sales and fewer new launches in the affordable housing segment, which has already been struggling since the COVID-19 pandemic.
What is the current state of the affordable housing market in India?
The affordable housing market, defined as homes priced at ₹45 lakh or less, has seen a significant decline, with its sales share dropping from 38% in 2019 to just 18% in H1 2025 across the top seven cities.
What are the potential consequences for developers and housing finance companies?
Developers catering to the affordable housing market are likely to face slower sales, while housing finance companies could experience rising loan defaults and weaker disbursements due to reduced disposable incomes.
What role can the government play in mitigating the impact of these tariffs?
The government can play a crucial role through trade negotiations, fiscal cushions, and buyer-focused incentives to support the affordable housing market and protect the economic stability of MSME workers.
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