The Export Promotion Mission (EPM) announced in the Union Budget will prioritize schemes to support micro, small, and medium enterprises (MSMEs) by addressing export credit needs and promoting alternative financing options such as factoring. According to Santosh Kumar Sarangi, Director General of Foreign Trade (DGFT), the mission has been allocated Rs 2,250 crore for 2025, with Rs 200 crore dedicated to the Market Access Initiative (MAI) and Rs 50 crore allocated to the lab-grown diamond sector.
The remaining budget will be used to develop schemes that improve export financing and assist MSMEs in overcoming non-tariff barriers (NTBs) such as testing, certification, and compliance with international standards.
New Approaches to Export Credit
The government is rethinking export financing formats, moving beyond traditional interest subvention schemes. MSMEs often face challenges with high collateral requirements, which hinder access to export credit. The DGFT noted that four out of five MSMEs struggle to secure loans due to collateral demands.
To mitigate this, the government is exploring mechanisms that reduce or partially waive collateral requirements for export credit. The total export credit demand for 2023-24 was $284 billion, while only $124.7 billion was provided. For India to achieve $1 trillion in exports by 2030, the estimated credit requirement is $650 billion.
Factoring Services to Fill Credit Gaps
The mission will also promote factoring services, a widely-used export financing method outside India. Factoring allows exporters to sell their receivables to service providers at a discount, transferring the risk of payment collection. Currently, India has only 11 factoring companies, compared to 2,000 in China. Globally, cross-border factoring is valued at $758 billion, but India accounts for only $1 billion of that market.
The DGFT emphasized the need for cross-border factoring to grow and reach at least 3% of India’s merchandise exports, aligning with the global average. The government is also considering partial financial support to bridge the gap between export receivables and the prices offered by factoring providers.
Also read: SIDBI Survey Shows Positive Outlook for MSMEs
Support for Compliance and Diversification
To help MSMEs tackle non-tariff barriers, the EPM will offer reimbursement for additional costs related to compliance and certification. This includes registration, testing, inspection, and compliance with global standards such as the European Union’s carbon tax, organic certification, halal certification, and energy audits.
The mission will also provide financial assistance for the procurement of plant and machinery and the diversification of supply chains. This includes sourcing alternative inputs that meet international standards, such as permissible pesticides and antibiotics for farmers and fishermen.
With these initiatives, the Export Promotion Mission aims to strengthen MSMEs’ global competitiveness and ease access to export financing, paving the way for sustained growth in India’s export sector.