The Indian government has recently announced a major boost for the Micro, Small and Medium Enterprises (MSME) sector by providing a subvention of 2.75% on export credit for MSME exporters. This move is aimed at promoting and supporting the growth of MSMEs in the country, especially in the international market. In addition, the government has also announced a collateral guarantee of up to 85% for micro exporters and 65% for small and medium exporters, which will further enhance their ability to access credit facilities and expand their export business.
This decision by the government comes as a much-needed relief for the MSME sector, which has been facing various challenges in the wake of the COVID-19 pandemic. With the global economy taking a hit, MSMEs have been struggling to sustain their businesses and maintain their export activities. The subvention of 2.75% on export credit will not only reduce the cost of credit for MSME exporters but also provide them with the necessary financial support to continue their export operations.
The collateral guarantee of up to 85% for micro exporters and 65% for small and medium exporters is a significant step towards easing the burden of collateral requirements for MSMEs. Collateral has always been a major hurdle for MSMEs in accessing credit facilities, as they often lack the necessary assets to provide as collateral. This has resulted in many MSMEs being unable to secure loans and expand their businesses. With the government’s guarantee, MSMEs can now avail credit facilities with ease and focus on growing their export business without worrying about collateral requirements.
The subvention and collateral guarantee are part of the government’s efforts to boost the Make in India initiative and promote the export of Indian goods and services. MSMEs play a crucial role in the country’s economy, contributing significantly to employment and GDP growth. By supporting MSME exporters, the government is not only promoting the growth of these enterprises but also contributing to the overall economic development of the country.
The subvention and collateral guarantee will also encourage MSMEs to explore new markets and diversify their export portfolio. With the reduced cost of credit and the assurance of collateral guarantee, MSMEs can now take calculated risks and venture into new territories, which will ultimately lead to their growth and expansion. This will also help in reducing India’s trade deficit and boost the country’s foreign exchange reserves.
The government’s decision to provide a subvention of 2.75% on export credit and collateral guarantee for MSME exporters is a testament to its commitment towards the growth and development of the MSME sector. It is a well-timed and much-needed step that will provide a much-needed impetus to the sector, especially during these challenging times. The MSME sector has always been the backbone of the Indian economy, and with this support from the government, it will continue to play a crucial role in the country’s economic growth.
In addition to the subvention and collateral guarantee, the government has also taken several other measures to support the MSME sector, such as the Atmanirbhar Bharat Abhiyan, which aims to make India self-reliant and boost domestic production. The government has also launched various schemes and initiatives to promote the growth of MSMEs, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Prime Minister’s Employment Generation Programme (PMEGP).
In conclusion, the subvention of 2.75% on export credit and collateral guarantee for MSME exporters is a game-changer for the sector. It will not only provide the necessary financial support to MSMEs but also boost their confidence and encourage them to explore new opportunities in the international market. The government’s efforts towards promoting the growth of MSMEs are commendable, and with such initiatives, we can expect to see a significant contribution from the sector towards the country’s economic growth and development.
