Trump tariffs could worsen India's affordable housing crisis. Here's how

India Today

2 days ago

Mounting trade tensions between India and the United States, marked by tariffs as high as 50% on Indian exports, threaten to further weaken India's affordable housing market, already under strain from pandemic aftershocks and rising input costs.Affordable housing, defined as homes priced up to Rs 45 lakh, accounted for just 18% of sales in India's top seven cities in the first half of 2025, down sharply from 38% in 2019, according to ANAROCK Group.advertisementIn absolute terms, 34,565 affordable homes were sold out of a total 1.90 lakh units during this period. Project launches have dropped even more steeply, from 40% of total launches in 2019 to just 12% this year.
The sector's troubles are closely tied to India's micro, small, and medium enterprises (MSMEs) and small and medium enterprises (SMEs)—the backbone of the country's export engine.Together, they contribute nearly 30% of GDP and over 45% of exports, employing more than 260 million people in labour-intensive industries such as textiles, engineering goods, auto components, gems and jewellery, and food processing. Workers in these industries form the primary demand base for affordable housing.MSME exporters have surged 228% in the last four years, from 52,849 in FY 2020-21 to 173,350 in FY 2024-25. But tariffs risk cutting into export revenues, threatening job security and income levels across this workforce, and in turn, eroding affordable housing demand.Dr. Prashant Thakur, Executive Director – Research & Advisory at ANAROCK Group, says, 'This category of homes priced Rs 45 lakh or less was already gravely hit by the Covid-19 pandemic and is still struggling to find any semblance of firm ground. Trump's mercenary tariffs will snuff out even the dimmest ray of hope for this segment.'(Source: ANAROCK Research & Advisory)The new tariffs, if implemented, will throw up a roadblock on what should be an open-speed highway, and cause a 'chakka jam' for the affordable housing vehicle carrying the homeownership dreams of India's largest lower-income population segment, adds ANAROCK.'Because of the disruption in this large workforce's future income thanks to the tariffs, affordable housing demand may very possibly derail and further impact sales in this highly income-sensitive segment,' Thakur said. 'Concurrently, such a drop in demand will curtail launches by developers, who will have to contend with tighter working capital due to lower sales. As it is, they have been grappling with serious input cost inflation since the pandemic.'Housing finance companies catering to this segment may also face rising default risks and lower loan disbursements as demand weakens. For developers already navigating cost inflation and constrained capital, fewer buyers will mean fewer launches.advertisementIndustry experts and policymakers warn that without urgent interventions—from export diversification and fiscal relief for MSMEs to easier homebuyer credit and developer support—India risks deepening the affordable housing crisis.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends