Expanding scope of ECLGS to help MSMEs, address funds shortage: Industry

The government's decision to expand the scope of the Rs 4.5 trillion ECLGS to support MSMEs would help deal with funds shortage and promote exports, industry bodies said on Wednesday

The government's decision to expand the scope of the Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to support micro, small and medium enterprises would help deal with funds shortage and promote exports, industry bodies said on Wednesday.

Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the decision will help achieve the USD 400 billion export target for this fiscal.

"The second wave of the pandemic was much worse as there were global orders but we were not in a position to serve them due to the lockdown restrictions. The extension is a real shot in the arm as we are trying to honour export orders ahead of the festive season," he said.

This is a very timely help as many apparel exporters are still facing acute funds shortage, he added.

Sakthivel, who is also president of the Federation of Indian Export Organisations (FIEO), said the decision will help in easing the liquidity, which has also been augmented with the release of Rs 56,000 crore by the government earlier.

Welcoming the decision of capital infusion of Rs 4,400 crore in ECGC over a period of five years, he said it is the most timely move as the growing uncertainties and liquidity in global trade are making exporters jittery as defaults are growing.

The finance ministry on Wednesday expanded the scope of the Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to support micro, small and medium enterprises facing liquidity issues due to the COVID-19 pandemic.

The validity of the scheme has been extended by another six months till March 31, 2022.

Yogesh Pawar, chairman, Association of Inspiring Syndicate of Entrepreneurs, said the disbursement has been slow in the scheme at the end of banking institutions and the government has not been able to meet the targeted amount for MSMEs.

"This is thought to be the primary reason for the extension in the scheme till March 2022. No doubt the scheme has been a boon for MSMEs during the post-COVID period, as they have been struggling with working capital requirement and the increase in raw material prices at the same time," Pawar said.

He called for a tracking system for timely disbursement.