The Centre has provided around Rs 1 lakh crore through the Emergency Credit Line Guarantee Scheme 5.0 (ECLGS) to assist MSMEs and other sectors amid the liquidity challenges triggered by the West Asia crisis. MSME Secretary Bharat Khera highlighted the government’s focus on supporting MSMEs to prevent undue hardships during these times. The ECLGS was introduced to help MSMEs address liquidity and working capital issues caused by disruptions from the West Asia crisis.
Khera emphasized the resilience of the industry in adapting to challenges like the COVID-19 pandemic and the recent West Asia crisis. He noted that the MSME sector has enhanced its robustness and resilience by addressing supply chain disruptions and exploring alternative sources. The Cabinet approved ECLGS 5.0 on May 5 to aid businesses facing short-term liquidity challenges due to the Middle East conflict, aiming to boost credit flow, including a specific allocation for the airline sector.
Under the scheme, the government offers 100% credit guarantee cover for MSMEs and 90% for non-MSMEs to lending institutions through the National Credit Guarantee Trustee Company Ltd (NCGTC). This measure aims to safeguard jobs during the crisis period. Post the West Asia crisis, the industry has ventured into new export markets, benefiting from India’s participation in various free-trade agreements (FTAs) that present significant opportunities for MSMEs.
Khera mentioned plans to explore the creation of an export finance arrangement for MSMEs in consultation with the Department of Financial Services, industry stakeholders, and Export Promotion Councils. This initiative responds to concerns raised by exporters regarding working capital constraints due to delayed export payments. By collaborating with industry and relevant authorities, a tailored export finance mechanism could be developed to support MSMEs in their export activities.
