Government Launches ₹7,295 Crore Schemes to Boost MSME Financing

On Friday, the Indian government introduced two measures such as including interest subversion and collateral support, with a sum allocation of Rs 7295 crore over a period of six years (FY26-31) to provide small exporters an upper hand in obtaining trade finance.

It is also being perceived as a significant effort to boost the Indian export environment, particularly during a period when there is uncertainty in the global trading environment, and financing is also expensive.

The interest subvention scheme to be named as Interest Subversion, pre- and post-shipment Export credit will allow micro, small and medium enterprises (MSMEs) to have access to export credit at subsidized rates, which are lower than the market interest rates. The government is trying to reduce liquidity pressures on small exporters by reducing the cost of borrowing, which will enhance their competitiveness in the global markets.

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Coupled with interest support, the collateral assistance element will help overcome one of the largest problems of the MSME exporters, the reduced access to credit because of insufficient security. All these measures should help to enhance the flow of credit, decrease reliance on informal financing, and motivate more small businesses to engage in export business.

According to the officials, the six-year term of the scheme gives the policy stability and long-term visibility to the policy makers who intend to expand the capacity or venture into new markets. The industry organisations have hailed the move as cheap export finance is the key to maintaining the growth in labour-intensive industries like textiles, leather, engineering goods, and handicrafts.

The project can be considered as part of the wider plan of the government to increase exports, enhance MSMEs, and facilitate employment creation. The measures will improve export competitiveness, foreign exchange earnings, and support the role of India in the global trade in the next few years by augmenting access to trade finance.