Exporters have appealed to the central government for support in ensuring affordable and readily available credit for Micro, Small, and Medium Enterprises (MSMEs) amid global challenges caused by a lack of liquidity. In a letter addressed to Finance Minister Nirmala Sitharaman, the Federation of Indian Export Organisations (FIEO), the leading body representing exporters, has requested an extension of the Emergency Credit Linked Guarantee Scheme (ECLGS) until March 31, 2024. Additionally, they have urged for the reinstatement of the 5% interest subsidy benefit for manufacturing MSMEs.

FIEO highlighted that certain MSME sectors have been adversely affected by a decline in exports due to a global decrease in demand. Extending the ECLGS until March 31, 2024, would provide much-needed support to micro, small, and medium enterprises, helping them navigate these challenging times and recover when the situation improves.

The letter emphasised the rising interest rates, with MSMEs currently securing credit at rates ranging from 8 to 11%. The subvention for the interest equalisation scheme was reduced as interest rates were decreasing. However, given the drastic change in the economic landscape, there is an urgent need to reinstate the 5% interest equalisation benefit.

India's exports experienced a significant decline of 6.86%, amounting to $34.48 billion in August, marking the seventh consecutive month of decline. This drop was primarily due to reduced shipments from key sectors such as petroleum and gems and jewellery, reflecting subdued global demand. The trade deficit for the month reached a 10-month high of $24.16 billion.

Cumulatively, exports from April to August in the current fiscal year contracted by 11.9%, totalling $172.95 billion. July also witnessed a notable decline of 15.88%in India's exports. Sectors such as tea, coffee, rice, spices, leather, gems and jewellery, textiles, and petroleum products were among those experiencing negative growth in August.

Source: Business Standard