The industry has praised the introduction of two key initiatives within the ‘Niryat Protsahan’ sub-scheme, aimed at enhancing MSME exports by facilitating affordable and simplified access to trade finance. These measures are expected to reduce export costs, broaden financial accessibility, diversify export destinations, and fortify India’s export reputation. The Federation of Indian Export Organisations (FIEO) has expressed appreciation for these initiatives, emphasizing their potential to strengthen MSME exports and enhance access to cost-effective trade finance significantly.
The first initiative involves offering interest subvention on pre- and post-shipment rupee export credit provided by eligible lending institutions. A base interest subvention of 2.75 percent has been declared, with additional incentives for exports to specified under-represented or emerging markets. This interest support will be applicable to exports falling under a designated positive list of tariff lines at the Harmonised System (HS) six-digit level, encompassing approximately 75 percent of India’s tariff lines, which represent sectors with substantial MSME involvement.
SC Ralhan, President of FIEO, highlighted that these measures address crucial challenges faced by MSME exporters, such as high credit costs and collateral shortages. The data-driven positive list, focusing on labor-intensive sectors, MSME concentration, and value addition, is designed to ensure that genuine exporters benefit from these provisions. Additionally, the inclusion of defense and SCOMET products is expected to bolster strategic and high-technology exports.
The second initiative introduces collateral guarantee support for export credit in collaboration with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This mechanism offers guarantee coverage of up to 85 percent for Micro and Small exporters and up to 65 percent for medium exporters, with a maximum guaranteed exposure of Rs 10 crore per exporter per financial year. The FIEO chief noted that this collateral guarantee framework will incentivize banks to enhance lending to export-focused MSMEs, particularly aiding small exporters who often struggle to meet collateral requirements.
Both interventions will undergo initial implementation on a pilot basis, with continuous monitoring and adjustments based on feedback and data analysis. Detailed operational guidelines for the interest subvention will be issued by the Reserve Bank of India, while the collateral guarantee scheme will be governed by CGTMSE. The Export Promotion Mission (EPM) has allocated a total outlay of Rs 25,060 crore for the period spanning FY 2025–26 to FY 2030–31.
