Govt Unveils Rs 72.95bn Export Credit Support Package

Home
Articles
Govt Unveils Rs 72.95bn Export Credit Support Package

Govt Unveils Rs 72.95bn Export Credit Support Package

Articles
Jan 08,26

Interest subsidy and guarantees to boost MSME exports

Govt Unveils Rs 72.95bn Export Credit Support Package

"The government has announced a Rs 72.95 billion export support package aimed at improving exporters’ access to credit, comprising a Rs 51.81 billion interest subvention scheme and a Rs 21.14 billion collateral support programme. Both measures will be implemented over a six-year period from 2025 to 2031.

Ajay Bhadoo, Additional Secretary in the Commerce Ministry, said the interventions are designed to address persistent trade finance challenges faced by exporters, particularly micro, small and medium enterprises (MSMEs). The interest subvention scheme, which has been resumed after a one-year gap, will provide subsidies on pre- and post-shipment export credit, helping to reduce borrowing costs.

MSME exporters currently pay between 9.5 per cent and 12.5 per cent for export credit. The subsidy is expected to improve their competitiveness at a time when global trade conditions remain challenging due to higher tariffs in key markets such as the US.

The package forms the second component of the Rs 250.6 billion Export Promotion Mission approved in November 2025. The first component, market access support with an outlay of Rs 45.31 billion, was rolled out on December 31, 2025.

Under the revised interest subvention scheme, eligible MSME exporters will receive subsidy benefits of up to 2.75 per cent. The Commerce Ministry said the rates will be reviewed twice a year in March and September, based on domestic and global benchmarks. The annual benefit will be capped at Rs 5 million per firm, although the scheme will still cover around 75 per cent of total tariff lines, or more than 12,000 product categories.

The scheme will be implemented by the Reserve Bank of India in coordination with the Directorate General of Foreign Trade. A pilot phase will be undertaken initially, with scope for refinement based on feedback. The interest subsidy will be benchmarked against India’s repo rate and comparable global policy rates, with adjustments made as interest rates change. Additional incentives will be offered to MSMEs exporting to new and emerging markets, with details to be notified separately.

Of the total Rs 51.81 billion allocation, around Rs 8.5 billion will be used in the current year to settle pending claims under the previous scheme that expired in December 2024. For the remaining quarter of the current financial year, the subsidy requirement is estimated at Rs 3 billion. The earlier scheme had provided a flat interest subsidy of 3 per cent.

Alongside this, the government has announced Rs 21.14 billion in collateral support for export credit. Under this measure, MSMEs will receive credit guarantee support for export-linked working capital loans, with collateral guarantees of up to Rs 100 million per firm. Guarantee coverage of up to 85 per cent will be available for micro and small exporters, and up to 65 per cent for medium exporters.

According to the DGFT, both the interest subvention and collateral support will apply only to exports from a selected positive list of products, including defence and SCOMET items. Restricted goods, waste and scrap, and products covered under production-linked incentive schemes will be excluded.

The collateral support framework will be implemented through the Credit Guarantee Fund Trust for Micro and Small Enterprises, beginning with a pilot phase before being integrated into a broader revision of export promotion mechanisms.

Welcoming the measures, the Federation of Indian Export Organisations said the twin interventions under the Niryat Protsahan sub-scheme would significantly strengthen MSME exports by addressing high borrowing costs and collateral constraints. FIEO President SC Ralhan said the initiatives would encourage banks to expand lending to export-oriented MSMEs and enhance their competitiveness in global markets, adding that both schemes would be closely monitored and refined during the pilot phase."