In a significant move to empower India's micro, small, and medium enterprises (MSMEs), the central government on Friday unveiled two pivotal financial support measures aimed at turbocharging exports from the sector. These interventions, part of the broader Export Promotion Mission (EPM), are designed to tackle the perennial challenges of high credit costs and collateral requirements that have long constrained smaller exporters.
Interest Subvention to Ease Liquidity Crunch
The first major intervention is an interest subvention scheme. This initiative will provide direct interest support on pre- and post-shipment export credit. The base rate of subvention is set at 2.75% on rupee export loans offered by eligible lending institutions. The primary goal is to reduce borrowing costs and alleviate liquidity pressures for MSME exporters, especially during the critical phases of shipment and payment realization.
The ministry indicated that an extra incentive might be available for exports to underrepresented or emerging markets, contingent on operational readiness. However, this support is targeted. It will apply only to exports covered under a specific "positive list" of tariff lines, which encompasses about 75% of India's tariff lines where MSME presence is strong.
An annual cap of ₹50 lakh per exporter has been set for the financial year 2025-26, linked to their Importer Exporter Code (IEC). The applicable rates will be reviewed every six months in March and September, based on domestic and global benchmarks. The positive list strategically focuses on labour-intensive and capital-intensive sectors with high MSME concentration and value addition.
Collateral Guarantee to Unlock Bank Finance
The second crucial measure introduces a collateral guarantee for export credit, developed in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This directly addresses one of the biggest hurdles for MSMEs: providing collateral to secure bank loans for exports.
Under this facility, a guarantee cover of up to 85% for micro and small exporters and up to 65% for medium exporters will be provided. There is a cap of ₹10 crore on the outstanding guaranteed exposure per exporter in a financial year. The government stated this guarantee is meant to complement existing mechanisms and encourage banks to increase lending to export-focused MSMEs.
Pilot Implementation and Industry Impact
Both schemes will be rolled out initially on a pilot basis, allowing for continuous monitoring and data-driven refinements. The Reserve Bank of India (RBI) will issue operational guidelines for the interest support, while CGTMSE will notify detailed guidelines for the collateral guarantee.
Reacting to the announcement, Vinod Kumar, President of the SME Forum, said these measures could significantly ease long-standing credit constraints. He highlighted that this support is particularly vital for smaller firms grappling with high borrowing costs and a lack of collateral, enabling them to compete more effectively in new international markets.
The push comes against the backdrop of stellar growth in MSME exports. Government data shows that MSME exports surged from ₹3.95 trillion in 2020-21 to ₹12.39 trillion in 2024-25. The number of exporting MSMEs also jumped dramatically from 52,849 to 173,350 in the same period. In 2023-24, MSMEs contributed a substantial 45.73% to the country's total exports.
These financial interventions follow the recent launch of the Market Access Support (MAS) under the EPM's Niryat Disha sub-scheme, which focuses on non-financial enablers like buyer connect and overseas visibility. The overarching Export Promotion Mission has a total outlay of ₹25,060 crore for the period from FY26 to FY31 and is being implemented jointly by the Department of Commerce, the Ministry of MSME, and the Ministry of Finance.
