(MENAFN- KNN India)
New Delhi, Jun 28 (KNN) The Union government is exploring the establishment of a dedicated fund to support exports by small businesses, according to sources familiar with the matter.
The proposal, which may be included in the upcoming Union budget, could involve a corpus of approximately Rs 5,000 crore, reported Mint.
The fund is expected to target first-time exporters with annual turnover below Rs 25 crore, aiming to set up export facilitation centres at the district level, develop export capacity through skills training, and support the One District One Product (ODOP) scheme.
This initiative aims to address the untapped export potential of Micro, Small, and Medium Enterprises (MSMEs).
Currently, MSMEs contribute about 45 per cent to India's total exports, but only 0.95 per cent of registered MSMEs engage in export activities, according to data from the Udyam portal.
The government already operates the Marketing Assistance and Export Promotion scheme, which provides training on marketing and packaging for export products.
The government's focus on MSME exports comes amid challenges in India's overall export performance. In the fiscal year 2024, merchandise exports declined by 3.11 per cent year-on-year to USD 437.06 billion.
Finance Minister Nirmala Sitharaman, in her interim budget presentation for FY25, emphasised the government's commitment to enhancing the global competitiveness of small businesses.
She highlighted the importance of timely financing, access to relevant technologies, and appropriate training for MSMEs.
The MSME sector plays a crucial role in India's economy, contributing approximately 27 per cent to the country's GDP and employing over 110 million people.
Experts suggest that broader reforms to simplify export processes and reduce compliance burdens could be more effective than targeted interventions.
These reforms could include creating a green channel for e-commerce exports, simplifying compliances, and easing restrictions on export payments.
The government's approach to supporting MSME exports will be closely watched as it seeks to boost this vital sector of the economy.
The proposed fund, if implemented, could potentially provide a significant boost to small businesses looking to enter the export market.
However, the effectiveness of such targeted measures versus broader structural reforms remains a topic of debate among economic experts.
As India aims to increase its global trade presence, the success of initiatives to support MSME exports could play a crucial role in achieving this goal.
(KNN Bureau)
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