Niti Aayog comes up with roadmap to boost exports from MSME sector

Niti Aayog has made a case for a single information portal for exporters to promote e-commerce exports and improve access to finance, especially for micro, small & medium enterprises (MSMEs).

In a report titled 'Boosting Exports from MSMEs', the Aayog said India has several portals that help exporters access information, most of which offer incomplete or outdated information.

"Therefore, creating a one-stop information data intelligence portal, using an Al-based interface will be essential to impart information to MSMEs," the report said, adding that this portal will answer all the queries of a potential exporter related to market tariffs, required paperwork, sources of finance, service providers, available incentives, and potential customers.

The report also suggested introducing an annual financial reconciliation process for e-commerce exporters, exemption of import duties on rejects or returns, granting exemption on reconciliation requirements for shipments up to USD 1,000 and creating a green channel clearance for e-commerce exports.

"To boost e-commerce exports, it is essential to create a distinction between exporter on record (EOR) and seller on record (SOR) and allow a reduction in invoice value without any percentage ceiling for all e-commerce exports," it said.

According to the report, access to finance is regularly seen as a key bottleneck for MSMEs and towards this end, the promotion of Export Credit Guarantee can help improve working capital availability for MSMEs.

"The current uptake of ECGC schemes is only 10 per cent and the government must create an incentive package to increase it to 50 per cent or more," it added.

On easing of merchandise exports, the Aayog has suggested relaxations for MSMEs from certain compliance requirements for a period, while putting in place a process for time-bound disbursement of incentives so that working capital is not blocked for MSMEs.

The report noted that Indian MSMEs can participate and compete in export markets, including handicrafts, handloom textiles, ayurveda and herbal supplements, leather goods, imitation jewellery and wooden products.

"Globally, these sectors constitute substantial markets exceeding USD 340 billion, whereas their domestic market is considerably smaller," it said.

The report pointed out that currently, a dependable single data source for MSME exports is lacking.

"To resolve this, a committee could be formed with representatives from the Directorate General of Foreign Trade (DGFT) as well as the finance ministry, along with the MSME ministry to create a mechanism for sharing requisite information without compromising confidential data of individual firms," it suggested.

The Aayog said MSMEs account for more than 11 crore jobs and contribute around 27 per cent of India's GDP.