Context:
The government is designing new support schemes to help small exporters with collateral free loans and compliance costs arising from non tariff measures imposed by developed nations. The schemes will also encourage alternative financing and reduce risks in uncertain markets.
Key Developments:
New Export Support Measures
- Free of collateral MSME exporter specific loans. Helping in compliance of non tariff measures such as:
- The EU’s carbon border tax and deforestation laws. The U.S. turtle exclusion device regulations. Promotion of Cross border factoring as another alternative financing route. Dedicated support for going to “risky markets” via a trade assistance program (TAP).
Export Promotion Mission & Budget Allocation
- Schemes fall under the umbrella of the ₹2,250 crore Export Promotion Mission unveiled by the Budget.
- ₹200 crore provisioned for Market Access Initiative (MAI) Scheme.
- The inter ministerial panel for these schemes are Commerce, Finance, and MSMEs.
Alterations in the Export Credit System
- Interest Equalisation Scheme (IES) was not renewed after December 31.
- New proposals have replacement plans for IES using even more focused export credit support.
- MSMEs face severe challenges in availing collateral so, the scheme to be framed shall be only partially or entirely free of collaterals.
- The plan includes up to 1 lakh exporters with capped benefits individually.
Scaling Up Trade Assistance for Risky Markets
- Banks fear advancing trade finance on riskier markets mainly because the relevant risk assessment data is limited in quantum.
- The government to expand the scope of Trade Assistance Programme, or TAP of Exim Bank.
- A Risk sharing fund is proposed. That will trigger more trade financing into these destinations.
