Schemes for Cheap Credit, Factoring Services, Trade Barrier Assistance for MSMEs Being Framed: DGFT
By: Admin
February 06, 2025
Categories: MSME | News
4 Min Read
The government is preparing targeted schemes to provide MSME exporters with enhanced access to cheap credit, factoring services, and assistance in addressing non-tariff barriers in international markets. According to the Director General of Foreign Trade (DGFT), Santosh Sarangi, these initiatives are part of the ₹2,250 crore export promotion mission announced in the Union Budget for 2025-26.
Key Developments
1. Collaborative Efforts
The schemes are being developed jointly by the Commerce, Finance, and MSME Ministries. Officials expect to roll them out within the next 3-4 months.
2. Budgetary Support
The export promotion mission aims to facilitate:
- Easy access to export credit.
- Cross-border factoring support.
- Assistance in tackling non-tariff measures for MSME exporters.
3. Integration of Existing Schemes
Two existing schemes, the Market Access Initiative (MAI) and the Interest Equalisation Scheme, will merge into the export promotion mission. These programs offer marketing assistance and subsidized credit.
Focus on Factoring Services
Factoring services, where service providers collect payments from foreign buyers on behalf of exporters (even in cases of buyer default), are a key focus.
Current Challenges
Adoption of export factoring services in India remains low due to:
- High factoring costs with higher interest rates and risk premiums.
- Limited parity with subvention schemes available for bank credit.
Proposed Solutions
- Leveling the playing field between banks and NBFC factoring firms.
- Scaling cross-border factoring to achieve 3% of merchandise exports, aligning with the global average.
DGFT Sarangi emphasized that increasing the adoption of factoring services could reduce exporters’ dependency on traditional bank credit, offering greater financial flexibility and security.
Support for MSMEs Against Non-Tariff Barriers
The export promotion mission will also assist MSMEs in addressing non-tariff measures imposed by other countries, which often hinder market access. This initiative aligns with the government’s broader goals of increasing India’s global trade competitiveness and empowering MSMEs to enter international markets more effectively.
What This Means for MSME Exporters
The proposed schemes aim to provide a comprehensive support system for MSME exporters by addressing their most pressing challenges. These measures will help MSMEs access affordable credit, secure reliable payment collection mechanisms, and overcome trade barriers. Ultimately, they are expected to enhance global competitiveness and significantly boost India’s export growth.
Stay tuned for updates on the rollout of these transformative schemes for MSME exporters.
