Government of India Announces Rs 7,295 Crore Financial Support Package for Exporters
In a significant move to boost the competitiveness of exporters, especially small and medium enterprises, the government of India has unveiled a comprehensive financial support package worth Rs 7,295 crore. This package aims to streamline access to credit and reduce borrowing costs for exporters, with a particular focus on sectors like handicrafts, horticulture, and manufacturing in Kashmir.
Key Components of the Package
The package, to be implemented over six years (2025-31), consists of two main components:
- Interest Subvention Scheme (Rs 5,181 crore): This scheme offers a direct subsidy on interest rates for pre-shipment and post-shipment export credit. Eligible MSME exporters can benefit from reduced interest rates, with subsidy benefits ranging from 2.75 per cent. This will significantly lower their borrowing costs, with the subsidy capped at Rs 50 lakh per firm annually.
- Collateral Support (Rs 2,114 crore): Addressing the issue of collateral requirements, this measure provides credit guarantee support for export-linked working capital loans. Micro and small exporters can receive up to 85 per cent guarantee coverage, while medium exporters can get up to 65 per cent coverage.
Opportunities for Kashmir Exporters
The export sector in Kashmir, especially MSMEs involved in handicrafts, horticulture, and manufacturing, stands to benefit significantly from these measures. Historically, local exporters have faced challenges due to high credit costs and lack of collateral. The new package directly addresses these pain points, enabling artisans and traders to access working capital at more competitive rates.
For instance, carpet exporters in Srinagar and fruit traders in Sopore can now avail loans at reduced interest rates, enhancing their competitiveness in international markets. The collateral support is particularly advantageous for small-scale exporters in Kashmir who often lack assets for securing loans.
Implementation and Impact
The interest subvention rates will be reviewed biannually to align with market trends. Additional benefits will be provided to MSMEs exporting to new markets, offering opportunities for diversification. The Reserve Bank of India and other relevant authorities will oversee the implementation of these schemes, with a focus on refining them based on feedback.
The package is expected to address critical challenges faced by Kashmir’s exporters, enabling them to price their products competitively in global markets. This initiative comes as part of the larger Export Promotion Mission, aimed at enhancing market access and support for exporters.
Local exporters are encouraged to stay informed about the guidelines and actively participate in the pilot rollout phase to provide feedback on specific implementation challenges in Jammu and Kashmir.
