India Plans ₹2,250 Crore Export Boost, Eyes Alternative Financing for MSMEs

The government is set to initiate inter-ministerial consultations to finalise schemes under the Export Promotion Mission, a senior official announced. The mission, announced in the FY26 Budget, intends to strengthen India's export sector by addressing credit requirements for micro, small, and medium-sized firms (MSMEs) and encouraging alternative financing options like factoring.

According to Santosh Kumar Sarangi, Director General of Foreign Trade, the ministries of finance and MSMEs, along with the Department of Commerce, are working on designing these schemes. Once finalised, they will be presented for Cabinet approval.

The mission's primary goal is to make export finance easier, particularly for exporters who face hefty collateral requirements. The government is investigating measures to expand export financing availability with little or no collateral. Currently, the expected credit demand for India's $437 billion in exports in 2023-24 was $284 billion, with only $124.7 billion given. By 2030, the projected export credit need will be $650 billion to support $1 trillion in exports.

In addition, the government is considering measures to expand factoring services, a financial technique that is widely used around the world but underutilised in India. Factoring allows exporters to sell their receivables to a service provider at a discount, reducing payment collection risks. The government is looking into methods to close the gap between receivables value and the amount offered by factoring firms.

To help MSMEs overcome non-tariff barriers, the mission may implement reimbursement systems for regulatory compliance costs. This includes registration, testing, certification, and inspection costs for organic and halal foods, electric appliances, energy audits, and compliance with the European Union's carbon price and deforestation rules. Financial help will also be provided for the acquisition of plant and machinery required to satisfy international standards and diversify supply chains, such as alternative raw materials that comply with global antibiotic and pesticide laws.

With these initiatives, the government aims to enhance India's export competitiveness and provide much-needed financial support to small and medium exporters navigating evolving global trade requirements.