Centre Rolls Out Interest Support, Credit Guarantee To Push MSME Exports

(MENAFN- Live Mint) New Delhi: Days after launching the market access support (MAS) intervention under the export promotion mission (EPM), the Centre on Friday rolled out two financial support measures to strengthen micro, small and medium enterprise (MSME) exports, including an interest subvention scheme and an export credit collateral guarantee.

Launched under the Niryat Protsahan sub-scheme of the EPM, the interventions are aimed at supporting smaller exporters facing working-capital and collateral constraints by lowering the cost of export credit and easing access to finance, the commerce ministry said in a statement.

Interest subvention

The first measure provides interest support on pre- and post-shipment export credit, with a base interest subvention of 2.75% on rupee export loans extended by eligible lending institutions. The support is aimed at reducing borrowing costs and easing liquidity pressures for MSME exporters, particularly during the shipment and realisation cycle.

An additional incentive may be offered for exports to under-represented or emerging markets, subject to operational readiness, the ministry said.

The interest support will apply only to exports covered under a notified positive list of tariff lines at the six-digit level under the Harmonised System, covering around 75% of India's tariff lines where MSME participation is high.

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An annual cap of ₹50 lakh per exporter, linked to the Importer Exporter Code, has been prescribed for FY26, with the applicable rates to be reviewed bi-annually in March and September based on domestic and global benchmarks.

The ministry said the positive list has been drawn up using a data-driven approach that prioritises labour-intensive and capital-intensive sectors with high MSME concentration and value addition, while excluding restricted or prohibited items, waste and scrap, and products already covered under overlapping incentive schemes.

Defence and SCOMET-notified items have been included to support strategic exports. Operational guidelines for the interest support will be issued by the Reserve Bank of India, and the scheme will be rolled out on a pilot basis with scope for refinement.

Collateral guarantee

The second intervention introduces a collateral guarantee for export credit in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), addressing one of the key barriers faced by MSME exporters in accessing bank finance.

Under this facility, guarantee cover of up to 85% for micro and small exporters and up to 65% for medium exporters will be provided, with a cap of ₹10 crore on the outstanding guaranteed exposure per exporter in a financial year.

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The government said that the collateral guarantee is designed to complement existing credit guarantee mechanisms and encourage banks to step up lending to export-oriented MSMEs. Detailed guidelines will be notified by CGTMSE, followed by a pilot phase before the facility is integrated into a broader revamp of export promotion frameworks.

Both interventions will be implemented initially on a pilot basis, with continuous monitoring and data-driven refinements, the ministry said.

Helpful for MSMEs

From the industry's perspective, Vinod Kumar, president of the SME Forum, said that the interest support and collateral guarantee measures could ease long-standing credit constraints for MSME exporters, particularly smaller firms that struggle with high borrowing costs and lack of collateral, and help them compete more effectively in new and emerging export markets.

As per government data, MSMEs exports have witnessed a remarkable rise, increasing from ₹3.95 trillion in 2020-21 to ₹12.39 trillion in 2024-25, underscoring their critical role in boosting India's economy and strengthening global trade.

The number of exporting MSMEs has also increased considerably - from 52,849 in 2020-21 to 173,350 in 2024-25. MSMEs contributed 45.73% to the country's exports in 2023-24.

Earlier moves

Earlier this week, the government launched the market access support (MAS) intervention under the Export Promotion Mission. Implemented under the Niryat Disha sub-scheme, the initiative aims to strengthen buyer connect, improve the visibility of Indian products overseas and help exporters-especially small businesses-enter priority and emerging markets.

The broader objective of the Export Promotion Mission is to reduce the cost of exporting, widen access to finance, diversify export markets and strengthen India's export brand, enabling MSMEs to integrate more deeply into global value chains.

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The Export Promotion Mission, with a total outlay of ₹25,060 crore for the period from FY26 to FY31, is jointly implemented by the Department of Commerce, the Ministry of MSME and the Ministry of Finance.

It comprises two sub-schemes-Niryat Protsahan, focused on trade finance support, and Niryat Disha, which addresses non-financial enablers such as market access, branding, regulatory compliance, logistics and trade intelligence.

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