Schemes under export mission in the works

Inter-ministerial consultations to finalise the schemes under the Export Promotion Mission will begin soon, a senior official said on Monday. According to the official, a bulk of the allocation of Rs 2,250 crore for the mission will be utilised in the schemes to address export credit requirements of micro, small and medium enterprises (MSMEs) and to promote the use of alternative financing instruments like factoring. The ministries of finance and MSMEs and the department of commerce are designing the schemes under the mission, announced in the Budget for FY26. Once the schemes are prepared, the Cabinet’s approval will be sought, director general of foreign trade Santosh Kumar Sarangi said.For export financing, the government is looking at addressing the problem of high collateral many of the exporters face. The government is working on a mechanism to increase export credit without giving collateral or with reduced collateral. The total export credit requirement for $437-billion exports in 2023-24 is $284 billion but only $124.7 billion is provided. The total export credit requirement is estimated at $650 billion in 2030 for exports of $1 trillion. The collateral support per exporter would be capped.

The government is also looking to promote factoring services, which are big outside India. It enables exporters to sell his export receivables to a factoring service provider at a discount. For the fee, the service provider accepts the risk of collection of the payment. The government is thinking of filling a part of the gap between the value of the export receivable and the price at which it is acquired by factoring service providers. To help MSMEs deal with non-tariff barriers, the mission will consider reimbursing additional costs incurred by them for conformity assessment compliance relating to registration, testing, certification and inspection for organic, halal, electric goods, energy audit, and the European Union’s carbon tax and deforestation regulations.