India unveils new Rs7,295cr package to shield MSMEs from US tariffs
The Indian government will provide guarantee coverage of up to 85% for micro and small exporters and up to 65% for medium exporters
The Indian government yesterday (2 December) announced a Rs7,295 crore export support package designed to improve credit access for exporters and boost overseas shipments.
The move comes as another measure aimed at strengthening the country's export sector in the face of steep tariffs imposed by the United States.
The package consists of two primary pillars: a Rs5,181 crore interest subsidy scheme and a Rs2,114 crore collateral support mechanism. These initiatives are part of a broader Export Promotion Mission, which has a total outlay of Rs25,060 crore scheduled from the current fiscal year through FY2030-31.
Keep updated, follow The Business Standard's Google news channel
The new interest subsidy mechanism for pre- and post-shipment export credit is specifically targeted at Micro, Small, and Medium Enterprises (MSMEs). Spread over six years, the scheme offers a 2.75% subsidy on loans, with a planned reset every six months.
Currently, small businesses borrow at rates between 9% and 12% to meet their credit requirements, and this subsidy is expected to provide significant relief.
The subvention will apply to a notified "positive list" covering nearly 75% of India's tariff lines, reflecting sectors with high MSME participation. Additionally, the Indian government has made provisions for further incentives for exports directed toward underrepresented or emerging markets, subject to operational readiness.
The second scheme addresses the collateral constraints frequently faced by small-scale exporters. By introducing collateral guarantee support for export credit, the Indian government aims to improve access to bank finance.
Under this arrangement, the government will provide guarantee coverage of up to 85% for micro and small exporters and up to 65% for medium exporters.
The maximum outstanding guaranteed exposure is set at Rs10 crore per exporter in a financial year. This scheme is designed to complement existing credit guarantee mechanisms and encourage banks to increase lending to export-oriented MSMEs.
According to the Indian commerce ministry, these interventions seek to lower the cost of exporting, expand access to finance, and strengthen India's export brand.
By focusing on MSMEs, first-time exporters, and labour-intensive sectors, the export mission aims to help local businesses integrate deeply into global value chains and achieve sustained export-led growth.
