Government Eyes Major Boost For Exporters With Collateral-Free Loans, Policy Reforms

The government is pushing forward a slew of measures under its Export Promotion Mission, including a proposal for collateral-free export credit and digital simplification of regulatory procedures, both of which have long been on the exporters' wishlist.

In a move set to significantly ease the financial and operational burden on Indian exporters, particularly Micro, Small and Medium Enterprises (MSMEs), the Ministry of Commerce has sought detailed feedback from industry stakeholders, including export promotion councils, to fine-tune proposed schemes aimed at enhancing India's global trade competitiveness.

A key element under active consideration is the expansion of collateral-free loans for exporters, leveraging existing credit guarantee structures like the Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE) scheme, according to sources.

Under the Budget-announced CGTMSE, loans of up to Rs 5 crore could soon be disbursed without any collateral, third-party guarantees, or excessive red tape. This would mark a critical intervention for MSMEs, which continue to struggle with high collateral demands and costly pre-shipment premiums.

These procedural upgrades come alongside broader structural concerns raised by exporters. The recently extended Interest Equalisation Scheme (IES), capped at Rs 50 lakh per MSME exporter for FY25, has been deemed insufficient by industry associations. They have called for reinstating the previous cap of Rs 10 crore to allow exporters to better navigate rising finance costs and global trade headwinds.

Exporters have also raised the points of delayed issuance of mandatory No Objection Certificates (NOCs) by the Ministry of Steel, which has disrupted shipments since September 2024 due to stalled Quality Control Committee meetings.

Meanwhile, Indian exporters also face external headwinds like the European Union's Carbon Border Adjustment Mechanism (CBAM), which imposes additional levies on carbon-intensive imports. To tackle that, exporters have urged the government to reimburse up to 50% of energy audit and clean production costs under the Market Access Initiative (MAI) Scheme, especially for MSMEs in sectors like steel and aluminium.

Other elements of the Mission could be a MAI grant for exporters trying to explore markets in LAC and Africa, and an export credit guarantee factoring scheme that offers 'Without Recourse' factoring.

The Export Promotion Mission is expected to be rolled out in phases after extensive stakeholder consultation.