MSME exporters will soon get targeted assistance from the government through specific schemes for cheap credit, factoring services and assistance to deal with non-tariff measures in other countries, an official has said.
The schemes, being framed under the ₹2,250 crore export promotion mission announced in the Union Budget for 2025-26, are being jointly drafted by the Commerce, Finance and MSME Ministries. “These are likely to be rolled out in 3-4 months,” Director General of Foreign Trade Santosh Sarangi said at an interaction with reporters on Tuesday.
Popular schemes
Provisions under the market access initiative (MAI) and the interest equalisation scheme, the two popular schemes for marketing assistance and subsidised credit for exporters which have not received any budgetary allocation, will be subsumed in the export promotion mission for now, the DGFT said.
Santosh Kumar Sarangi, Director General Foreign Trade
| Photo Credit: KAMAL NARANG
Announcing the export promotion mission in her Budget speech on February 1, Finance Minister Nirmala Sitharaman said it will facilitate easy access to export credit, cross-border factoring support, and assistance for MSMEs in tackling non-tariff measures in overseas markets.
Sarangi said that promoting factoring services, where the service provider takes on the responsibility for collecting the money from the foreign buyer on behalf of the exporters, even if the buyer defaults on the payment, would bring down exporters’ dependence on banks.
Although export factoring services is a widely used financing instrument globally, it has low adoption in India due to high factoring costs involving higher rates of interest, higher risk premiums and lack of parity with subvention schemes.
Key factors
This is due to high factoring costs involving higher rate of interests, higher risk premium, lack of parity with subvention schemes.
The proposed modalities to promote it include creating a level playing field for banking and NBFC factoring firms.
“The cross-border factoring should attain certain scale to reach about 3 per cent of merchandise exports (in line with global average,” the DGFT said.
