Commerce Min seeks exporters' views on schemes under export promotion plan

The commerce ministry has sought views of export promotion councils (EPCs) on the different schemes which the government is framing under the export promotion mission announced in the Union Budget, an industry official said.

The councils will have to submit their comments by tomorrow to the Directorate General of Foreign Trade (DGFT), the official said.

The government is framing schemes for MSME exporters to provide credit on easy terms, promote alternate financing instruments through strengthening factoring services for them and offer monetary assistance to deal with non-tariff measures imposed by other countries.

The commerce, MSME and finance ministries are working on these schemes.

In the meeting, DGFT Ajay Bhadoo made a presentation on the mission to the representatives of the councils. Officials from ECGC, EXIM bank, and the RBI were also present at the meeting.

Certain exporters have suggested to the ministry that funds under MAI (Market Access Initiative) should be given only to the EPCs and not to private associations.

The meeting was chaired by Commerce Secretary Sunil Barthwal.

The government on February 1 announced the setting up of an Export Promotion Mission with an outlay of Rs 2,250 crore to promote the country's outbound shipments.

Finance Minister Nirmala Sitharaman has said that through the mission, the government will facilitate exporters to get easy access to credit, cross-border factoring support, and support MSMEs to tackle non-tariff measures in overseas markets.

Earlier, the ministry was getting funds under the Market Access Initiative and Interest Equalisation Scheme (IES). It was clubbed under export promotion schemes.

Now, these schemes are bundled under the export promotion mission. Though the IES ended on December 31, 2024, the exporting community has been pitching hard for its extension.

The modalities for the new scheme of offering credit on favourable terms would include a mechanism to facilitate MSMEs to raise export credit without collateral and average collateral cover with a cap on individual exporters.

At present, MSMEs require collateral while availing export credit. As per different surveys, 4 out of 5 MSMEs face the issue of collateral.

In supporting these enterprises to overcome non-tariff measures (NTMs), there are plans to provide reimbursement for additional costs incurred by them on account of compliances relating to registration, testing, certification and inspection.

NTMs are far more trade restrictive than tariffs, or customs duties, and negatively affect export market diversification overall and the agricultural sector in particular.

A trade assistance programme (TAP) scheme for risky markets is also under consideration.

The ministry is also looking to promote factoring services, as it would help reduce the dependence of exporters on banks.

Export factoring services, a widely used financing instrument globally, have low adoption in India due to high factoring costs involving higher rates of interest, higher risk premiums and lack of parity with subvention schemes.

The cross-border factoring should attain a certain scale to reach about 3 per cent of merchandise exports, in line with the global average, the industry official said, adding that interest subvention can be provided to factoring companies.

The global cross-border factoring is estimated at $758 billion but in India, it is only $1 billion.