MSME Exporters Hit Hard By Liquidity Crunch, Demand Immediate Relief Measures

(MENAFN- KNN India) New Delhi, Jan 2 (KNN) Indian exporters are facing significant liquidity challenges, compounded by high interest rates and a marked decline in export finance, said Sanjay Budhia, Chairman of the CII National Committee on EXIM.

These factors are undermining their competitiveness in global markets, especially for MSME exporters, who are the backbone of India's export ecosystem.

To mitigate these challenges, Budhia has urged the government and banks to collaborate on effective solutions. He emphasised the need to extend the Interest Equalisation Scheme, which expired on December 31, 2024, for another three years to benefit all manufacturing exporters, including MSMEs. The scheme's limited extension leaves Indian manufacturers at a disadvantage, he noted.

Budhia proposed increasing the interest subsidy for pre- and post-shipment credit from 3 per cent to 5 per cent for key sectors like leather, engineering, apparel, and gems and jewellery.

Additionally, he recommended expanding Letter of Credit facilities for large overseas projects and broadening the coverage of export credit guarantees.

He suggested raising the Export Credit Guarantee Corporation of India's coverage from Rs 50 crore to Rs 100 crore to enhance credit accessibility.

The Federation of Indian Export Organisations (FIEO) echoed these demands, urging the government to extend the scheme for five years in the upcoming Union Budget.

FIEO highlighted a 5 per cent decline in export credit from Rs 2,27,452 crore in March 2022 to Rs 2,17,406 crore in March 2024, with priority sector lending for exports plunging over 40 per cent during this period.

Budhia also called for the streamlined implementation of the RoDTEP scheme by directly transferring benefits to exporters' bank accounts to reduce delays and inefficiencies.

Looking ahead, Budhia expressed concern over US President-elect Donald Trump's threat of reciprocal tariffs on Indian goods.

While these tariffs could disrupt trade flows and reduce competitiveness in sectors like engineering and textiles, he noted potential opportunities for Indian exporters to fill supply chain gaps left by China.

India's exports reached USD 778 billion in 2023-24 and are projected to surpass USD 800 billion in 2024-25. However, challenges from global policy shifts and geopolitical turbulence continue to cast uncertainty over trade prospects.

(KNN Bureau)

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