The government has unveiled a Rs 7,295-crore package to support exports, including a Rs 5,181-crore interest subvention scheme and Rs 2,114-crore collateral support. These initiatives aim to enhance credit access for exporters over six years from 2025 to 2031. Ajay Bhadoo, Additional Secretary in the Commerce Ministry, stated that these measures will tackle trade finance challenges faced by exporters.
The interest subvention scheme, which resumes after a year-long pause, offers subsidies on pre- and post-shipment export credit. This initiative aims to reduce credit costs for exporters. Currently, MSMEs pay between 9.5% and 12.5% for export credit. The subsidy will help make their products more competitive globally, especially amid high US tariffs.
Interest Subvention Scheme Details
This scheme is part of the Rs 25,060-crore export promotion mission approved in November 2025. The first component, market access support with Rs 4,531 crore, was launched on December 31, 2025. The subvention scheme will enable exporters from selected sectors to access rupee export credit at competitive rates during challenging global trade conditions.
Eligible MSME exporters will receive subsidy benefits ranging from 2.75%. The commerce ministry will review subvention rates bi-annually in March and September based on domestic and global benchmarks. Each firm can receive an annual benefit capped at Rs 50 lakh.
Collateral Support for Export Credit
The government also announced Rs 2,114-crore collateral support for export credit. This includes credit guarantee support for MSMEs seeking export-linked working capital loans. Firms can receive up to Rs 10 crore in collateral guarantees under this measure.
Micro and small exporters can access guarantee coverage up to 85%, while medium exporters can access up to 65%. According to the DGFT, interest subvention and collateral support apply only to exports from a selected positive list of products.
Implementation and Feedback
The RBI will release detailed guidelines for the scheme as the implementing agency alongside the Directorate General of Foreign Trade (DGFT). A pilot roll-out will be conducted with potential refinements based on feedback from implementation.
Despite the cap, the scheme covers 75% of total tariff lines or product categories over 12,000. The interest rate subvention is capped at 2.75% and benchmarked against India’s Repo or policy rates and comparable economies. Rates will adjust every March and September based on interest rate movements.
Industry Response
The Federation of Indian Export Organisations (FIEO) welcomed these measures under the NIRYAT PROTSAHAN sub-scheme of the EPM. FIEO President SC Ralhan noted that these interventions would strengthen MSME exports by improving access to affordable trade finance.
“These announcements will address two of the biggest challenges faced by MSME exporters — high cost of credit and lack of collateral,” said Ralhan. He added that these measures would greatly enhance the competitiveness of Indian MSMEs in global markets.
The collateral guarantee framework is expected to encourage banks to increase lending to export-oriented MSMEs and complement existing credit guarantee schemes. This has been a long-standing demand from small exporters struggling with collateral requirements.
Both interventions will initially be implemented on a pilot basis with continuous monitoring and refinements based on feedback and data analysis, according to Ralhan.
With inputs from PTI
