The Indian government and trade organizations are joining forces to provide enhanced support measures for exporters, emphasizing the need for financial backing and resources to bolster competitiveness.
On the horizon, the government may announce significant measures to increase financial support for exporters and small businesses. This initiative aims to address persistent issues the two sectors have faced, particularly concerning access to credit. Expected during the upcoming budget announcement, these measures involve collaboration with the finance ministry to facilitate adequate credit flow and the availability of financial instruments, including factoring and credit guarantees. A commerce department source revealed, "The idea is to help them overcome the challenges they are facing and finance is a key one."
One of the options being explored includes collateral-free lending to streamline access to funds for micro, small, and medium enterprises (MSMEs), many of which struggle to provide the necessary security to secure loans. The government recognizes the importance of small businesses, especially post-Covid-19, to the economy's overall vibrancy. Recent changes have seen guarantee-based loans become more accessible, sparking hopes for renewed financial inflow, especially for exporters.
Further underscoring the urgency for reform, the interest equalization scheme, which has lingered pending approval by the finance ministry for months, may also be initiated to ease the burden high interest rates place on Indian traders. This hurdle, coupled with logistical costs, has placed local exporters at a disadvantage compared to their regional competitors.
Marking another effort to support exporters, the Gem & Jewellery Export Promotion Council (GJEPC) concluded its 7th session of the Exporter Mentorship Programme (EMP) on January 23, 2025. The session focused on "Policy Incentives for Exporters" and was attended by over 65 participants eager to gain insights to thrive in international markets. Key speakers included K.K. Duggal and Archana Gautam from GJEPC, who elaborated on various policy measures, such as the operations of Special Notified Zones (SNZ) and the Diamond Imprest Licence among others. Through this program, GJEPC aims to empower participants with indispensable knowledge on leveraging policy frameworks for export growth.
Yet another significant partnership has emerged as the Federation of Indian Export Organisations (FIEO) formalized its alliance with Credlix, specialists in supply chain financing solutions. This collaboration, driven by the urgency to streamline international trade, provides Indian exporters with innovative financial solutions and logistical support. Rahul Garg, the Founder & CEO of Credlix, stated, "We are proud to collaborate with FIEO to empower Indian exporters on their path to growth and self-reliance." The partnership is set to offer workshops, training, and financing advisory services to strengthen operational capabilities and facilitate scaling.
Dr. Ajay Sahai, Director General & CEO of FIEO, highlighted the operational challenges faced by exporters, particularly the liquidity gap and lack of credit flow, emphasizing their impact on MSMEs, which contribute significantly to India’s export sector. He stated, "Export finance remains acritical issue for various segments, particularly for MSMEs, which are the backbone of India's export ecosystem." MSMEs constituted approximately 45.73% of India’s total exports during the last fiscal year, yet they continue to face hurdles accessing necessary financing.
Statistics offer insight, with loans to micro and small enterprises rising by just 4.3% recently, contrasted with 12% for medium-sized businesses, amid reporting of overall credit growth at around 6.6%. With over 35,000 FIEO members engaged primarily in the MSME sector, this collaboration aims to empower exporters by removing barriers and enhancing operational efficiency.
Collectively, these concerted efforts by the Indian government and key organizations reflect the urgent need to equip exporters and small businesses with the necessary tools and resources to thrive. Strengthening financial frameworks not only boosts competitiveness but also reinforces India's positioning within the global trading ecosystem.