The affordable housing segment, driven by demand from the working-class engaged in the small and medium industries, may be collateral damage if the escalating tariff war between India and the US does not subside, experts have cautioned.
The sub-₹45 lakh homes—defined as the affordable segment in real estate parlance, constitute about 18 per cent of total apartment sales in the January-June period of 2025 in the top seven cities of India, according to consultancy Anarock, down from the high of 38 per cent it reached in 2019.
The segment, which is already bearing the brunt of the Covid pandemic, which disrupted the MSME sector, used to be a mainstay of Calcutta and its peripheral markets. However, home price increases over the last four years have taken some of the projects out of the ‘affordable’ category.
The 50 per cent tariff proposed to come into effect by August 27 is going to hit a range of India’s exports, from textiles, gems and jewellery to footwear, food processing, among others. Rating agency Moody’s has warned that the US tariff, higher than India’s Asian peers, will undermine India’s manufacturing ambition and slow economic growth.
“This (affordable) category of homes priced ₹45 lakh or less was already gravely hit by the Covid-19 pandemic and is still struggling to find firm ground. Trump’s mercenary tariffs will snuff out even the dimmest ray of hope for this segment,” Prashant Thakur, executive director - research & advisory, Anarock Group, said in a note.
India’s affordable housing segment is mainly driven by demand from MSMEs and SMEs, which are deeply integrated into India’s export ecosystem. Their workforces are the primary clientele for affordable housing, Anarock said.
Sushil Mohta, president, Credai West Bengal & chairman, Merlin Group, however, differed. “There may be a short-term impact on the economy, affecting several sectors, including housing. However, I do not believe this will have any long-term effect,” Mohta said.