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India Boosts MSME Exports with New Credit Support and Guarantee Schemes

The Federation of Indian Export Organisations has welcomed two key interventions under the 'Niryat Protsahan' sub-scheme to strengthen MSME exports. The first provides an interest subvention of 2.75% on pre- and post-shipment rupee export credit, targeting sectors with high MSME participation. The second introduces a collateral guarantee mechanism offering up to 85% coverage for micro and small exporters through CGTMSE. Both measures, launched on a pilot basis, aim to lower credit costs, ease collateral requirements, and enhance the global competitiveness of Indian MSME exporters.

Key Points: MSME Export Credit Support & Collateral Guarantee Launched

  • Interest subvention of 2.75% on export credit
  • Collateral guarantee up to 85% for micro/small exporters
  • Focus on labor-intensive and high-MSME sectors
  • Pilot implementation with continuous monitoring
3 min read

2 key interventions to improve access to export credit, strengthen MSMEs: Industry

India launches interest subvention and collateral guarantee schemes to lower export costs, expand finance access, and strengthen MSME competitiveness globally.

2 key interventions to improve access to export credit, strengthen MSMEs: Industry
"These measures will greatly enhance the competitiveness of Indian MSMEs in global markets. - SC Ralhan, FIEO President"

New Delhi, Jan 3

The industry has hailed two key interventions under the 'Niryat Protsahan' sub-scheme to strengthen MSME exports by providing affordable and easier access to trade finance, saying this will lower the cost of exporting, expand access to finance, diversify export markets and strengthen India's export brand.

The Federation of Indian Export Organisations (FIEO) welcomed the launch of two critical interventions, aimed at strengthening MSME exports and significantly improving access to affordable trade finance.

"The launch of interest support for pre- and post-shipment export credit and the collateral guarantee mechanism marks a decisive step towards addressing two of the biggest challenges faced by MSME exporters-high cost of credit and lack of collateral. These measures will greatly enhance the competitiveness of Indian MSMEs in global markets," said SC Ralhan, President, FIEO.

The first intervention provides 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 announced, with a provision for additional incentives for exports to notified under-represented or emerging markets, subject to operational readiness.

The interest support will apply to exports under a notified positive list of tariff lines at the Harmonised System (HS) six-digit level, covering nearly 75 per cent of India's tariff lines, reflecting sectors with high MSME participation.

An exporter-wise annual cap of Rs 50 lakh per Importer Exporter Code (IEC) has been prescribed for FY2025-26, with rates to be reviewed bi-annually in March and September.

Ralhan said that the data-driven positive list, with its focus on labour-intensive sectors, MSME concentration and value addition, will ensure that benefits reach genuine exporters. Inclusion of defence and SCOMET products will also support strategic and high-technology exports.

The second intervention introduces collateral guarantee support for export credit in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Under this mechanism, guarantee coverage of up to 85 per cent will be available for Micro and Small exporters and up to 65 per cent for medium exporters, with a maximum guaranteed exposure of Rs 10 crore per exporter per financial year.

This collateral guarantee framework will encourage banks to increase lending to export-oriented MSMEs and complement existing credit guarantee schemes. It is a long-standing demand of the exporting community, particularly small exporters who struggle to meet collateral requirements, said the FIEO chief.

Both interventions will be implemented initially on a pilot basis, with continuous monitoring and refinements based on feedback and data analysis.

Detailed operational guidelines will be issued by the Reserve Bank of India for interest subvention and by CGTMSE for the collateral guarantee scheme.

The Export Promotion Mission (EPM) has a total outlay of Rs 25,060 crore for the period FY 2025-26 to FY 2030-31.

- IANS

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Reader Comments

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Priyanka N
Good initiative on paper. The Rs 50 lakh cap per IEC is reasonable for micro units. My concern is the "pilot basis" and "continuous monitoring" part. Often, such schemes get stuck in bureaucratic delays. Hope the operational guidelines from RBI and CGTMSE are issued swiftly and are simple to follow.
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Rohit P
Diversifying export markets is key! The extra incentive for under-represented markets is a smart move. We've been trying to break into Africa and Latin America, but the risks and costs are high. This support might just give us the push we need. More 'Make in India' products going global! 💪
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Aman W
The inclusion of defence and high-tech (SCOMET) products is a forward-looking step. It shows the government is serious about moving up the value chain, not just promoting traditional goods. Strengthening MSMEs in these sectors is crucial for long-term strategic and economic security.
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Nisha Z
As a respectful criticism, I hope the "data-driven positive list" is truly dynamic. The world economy changes fast. A product that is competitive today may not be in six months. The bi-annual review is good, but the process to add/remove items from the list should be transparent and quick.
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David E
Working with Indian MSME suppliers, I've seen the collateral issue first-hand. A guarantee cover of up to 85% is significant. This should unlock credit for many capable small businesses who have orders but lack property to mortgage. If implemented well, it could be a game-changer for export growth.

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