New Delhi: With US tariffs escalating trade costs and the current trajectory showing challenges in achieving the $1-trillion export target by 2030, the Commerce Ministry is pushing for a wider interest subvention scheme (ISS) for all MSMEs & labour-intensive industries in its proposed Export Promotion Mission (EPM).
“The ISS is expected to cushion India’s labour-intensive sectors (textiles, leather & footwear, marine products, engineering goods), which are among the hardest hit due to US tariffs, thereby ensuring competitiveness and safeguarding employment,” said a ministry official.
He said the ministry has designed the EPM to help MSMEs and first-time exporters with the aim to diversify India’s export basket and to support labour-intensive sectors.
Supported by a budget of Rs 25,060 crore spread over six years starting this fiscal, the EPM aims to modernise India’s export framework where high logistics costs, limited trade finance, market access constraints and compliance bottlenecks have been identified as key impediments to export growth. The Mission will bring together two steams of financial & non-financial interventions within a single coordinated framework, thereby replacing earlier fragmented efforts.
While Niryat Protsahan focusses on financial enablers like interest subvention, collateral support, e-commerce export credit cards, risk-sharing mechanisms, and support for likely opportunities, Niryat Disha targets non-financial steps including quality and compliance support, market access initiatives, warehousing and logistics, inland transport for low-export regions, branding and packaging, and trade intelligence services. But the EPM’s main bulwark is the Rs 5,179-crore ISS to offset India’s high repo rate as compared to others whereby Indian MSMEs borrow at rates above 11 percent against 2 to 4 percent in competitor economies like China, South Korea & Thailand.
The ISS has been designed to help the smaller players unlike the Interest Equalisation Scheme (IES) which was putting more money in the hands of few. The former enlarges the benefit distribution by capping it at Rs 30 lakhs per exporter per year with interest relief ranging between 2 to 3.5 percent.
The IES had a cap of Rs 10 crore per exporter with interest subvention of 3 percent thereby resulting in less than 10 percent exporters taking away 65 percent of the outlay. “The ISS is expected to cover 84 percent of the MSME beneficiaries while curbing fiscal concentration,” the official said.
“Interest subvention is a crucial tool for ensuring affordable export finance, particularly for MSME exporters. It will function as a foundational liquidity support enabling MSME exporters to better leverage complementary interventions under the EPM,” he said.
Besides, the dynamic ISS will enable MSMEs to access pre- and post-shipment credit in rupees at competitive rates. It would address the prohibitive cost of export credit faced by MSMEs; ease liquidity constraints and improve competitiveness given the global interest rate differential.
The ISS would be fully digital with unique registration number to introduce paperless system for application, disbursal and audit trail. It would be limited to the positive HS code list, based on factor-intensity and value-addition, so that support for to priority sectors. The EPM will be jointly anchored by the Department of Commerce, Ministries of Finance and MSME, with active involvement of sectoral stakeholders.
Its oversight will be ensured through a three-tier structure comprising: a Steering Committee chaired by the Commerce Secretary; an Inter-Ministerial Committee with MSME and Finance as other members; and Sub-Committees for specific components. A digital dashboard and annual reporting will provide transparency, efficient use of resources, and accountability to stakeholders.