The Commerce Ministry has invited inputs from Export Promotion Councils (EPCs) on a range of schemes being developed under the recently announced Export Promotion Mission, according to an industry official. The councils have been asked to submit their feedback to the Directorate General of Foreign Trade (DGFT) by tomorrow.
The government is formulating several initiatives aimed at supporting MSME exporters. These include offering easier access to credit, expanding alternate financing options like factoring services, and providing financial assistance to help exporters manage non-tariff measures (NTMs) imposed by other countries. The Commerce, MSME, and Finance Ministries are jointly working on these proposals.
During a recent meeting chaired by Commerce Secretary Sunil Barthwal, DGFT Ajay Bhadoo presented an overview of the mission to EPC representatives. Officials from the Reserve Bank of India (RBI), Export Credit Guarantee Corporation (ECGC), and EXIM Bank were also present.
Exporters have suggested that funds under the Market Access Initiative (MAI) should be allocated exclusively to EPCs rather than private industry associations.
As announced in the Union Budget on February 1, the Export Promotion Mission has been allocated Rs 2,250 crore to bolster India’s outbound shipments. Finance Minister Nirmala Sitharaman had highlighted that the mission aims to ease access to export credit, support cross-border factoring, and help MSMEs address NTMs in foreign markets.
Previously, schemes such as the MAI and the Interest Equalisation Scheme (IES) were funded separately under export promotion. These have now been consolidated under the Export Promotion Mission. While IES officially ended on December 31, 2024, exporters have been urging the government to extend it.
One of the key proposals under consideration is a new credit support mechanism for MSMEs that eliminates the need for collateral. Current requirements for collateral pose a significant challenge, with surveys indicating that four out of five MSMEs struggle with this issue.
To mitigate the impact of NTMs, the government is planning to reimburse MSMEs for costs related to compliance activities such as registration, testing, certification, and inspection. These measures are considered more restrictive than tariffs and have a disproportionate effect on export diversification and agriculture.
A Trade Assistance Programme (TAP) is also being explored to support exporters operating in high-risk markets.
Another focus area is enhancing the adoption of factoring services to reduce exporters’ dependence on traditional banking channels. Despite its global popularity, factoring remains underutilized in India due to high costs and limited policy support. Global cross-border factoring stands at $758 billion, whereas India’s market is estimated at only $1 billion. The ministry aims to scale this to 3% of India’s merchandise exports, aligning with global benchmarks, and may consider interest subvention for factoring companies to encourage wider use.
