Government Launches Schemes To Boost Trade Finance For MSME Exporters

(MENAFN- KNN India) New Delhi, Jan 3 (KNN) The central government has launched two schemes under Export Promotion Mission (EPM) to strengthen MSME exports and improve access to trade finance.

Seeking to reduce the cost of export credit and easing working-capital constraints faced by MSME exporters, the government will provide interest subvention on pre- and post-shipment rupee export credit extended by eligible lending institutions.

"A base interest subvention of 2.75 per cent has been provided, with a provision for additional incentive for exports to notified under-represented or emerging markets, subject to operational readiness," an official statement from Ministry of Commerce and Industry said.

Interest Subvention to Cover 75% of Tariff Lines

The interest subvention will be applicable only to exports covered under a notified positive list of tariff lines at the Harmonised System six-digit level, covering approximately about 75 per cent of India's tariff lines and reflecting high MSME participation. An exporter-wise annual cap of Rs 50 lakh per Importer Exporter Code (IEC) has been prescribed for the financial year 2025–26.

The applicable rates will be reviewed bi-annually in March and September, taking into account domestic and global benchmarks.

The Commerce Ministry noted that the positive list has been prepared using a transparent and data-driven methodology, prioritising labour-intensive and capital-intensive sectors, MSME concentration and value addition. Restricted and prohibited items, waste and scrap, and products covered under overlapping incentive schemes have been kept out of the scheme.

RBI to Issue Operation Guidelines

Detailed operational guidelines for this intervention will be issued by the Reserve Bank of India (RBI). A pilot of the scheme will be rolled out with scope for refinement based on implementation feedback.

Collateral Guarantee For Export Credit

The second scheme unveiled under EPM is aimed at addressing collateral constraints faced by MSME exporters, and improving access to bank finance.

Under this intervention, a collateral guarantee support for export credit has been introduced in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

As per the scheme, guarantee coverage of up to 85 per cent will be provided for Micro and Small exporters and up to 65 per cent for Medium exporters, with a maximum outstanding guaranteed exposure of Rs 10 crore per exporter in a financial year.

This scheme is designed to complement existing credit guarantee mechanisms and to increase bank lending to export-oriented MSMEs.

Detailed guidelines of the scheme will be notified by CGTMSE, followed by a pilot phase and subsequent integration into a comprehensive revision of export promotion frameworks.

The Commerce Ministry said that the two schemes of the EPM will be implemented on a pilot basis with continuous monitoring and data-driven refinements.

EPM For Boosting Exports

The Union Cabinet recently approved Rs 25,060 crore Export Promotion Mission to make Indian exports more competitive globally by providing policy support in the wake of persistent uncertainties.

The Mission seeks to lower the cost of exporting, expand access to finance, strengthen India's export brand and diversify export markets. This is expected to enable Indian exporters, particularly MSMEs, to integrate more deeply into global value chains and contribute to sustained export-led growth.

The Export Promotion Mission is being jointly implemented by the Department of Commerce, Ministry of MSME and Ministry of Finance.

The Mission broadly has two integrated sub-schemes namely NIRYAT PROTSAHAN and NIRYAT DISHA. While NIRYAT PROTSAHAN focuses on enabling access to affordable and diversified trade finance, NIRYAT DISHA supports non-financial enablers such as market access, branding, regulatory compliance, logistics and trade intelligence.

Industry Hails Credit Support

Commenting on the interventions under the Export Promotion Mission, EEPC India Chairman Pankaj Chadha said that the schemes would help lower finance cost for MSME exporters thus making them more competitive in global markets.

“The engineering exporting community welcomes the rollout of schemes to provide interest support and collateral guarantee for export credit under Export Promotion Mission (EPM). The interventions will help exporters, especially labour-intensive MSMEs, in getting affordable credit. As a result of these initiatives, we expect the finance cost of MSME exporters to come down thus making them more competitive in global markets,” he said.

Mr Chadha, however, said that the government should have included Chapter 72 (iron and steel and their products) in the new schemes.

(KNN Bureau)

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