The Indian government has announced a Rs 7,295 crore package to improve exporters’ access to affordable credit, aiming to ease trade finance constraints for small and medium enterprises. The package, to be implemented over six years from 2025 to 2031, combines an interest subvention scheme with collateral support to lower the cost and availability barriers that many exporters face.
export credit subsidy India will cut borrowing costs for MSMEs
At the heart of the package is a Rs 5,181 crore interest subvention scheme, resumed after a one-year hiatus, which will provide a subsidy on both pre-shipment and post-shipment export credit. The government said the measure will reduce the effective interest burden for eligible exporters and make rupee-denominated export lending more competitive at a time of global trade headwinds.
In addition, a Rs 2,114 crore collateral support facility will help exporters who struggle to provide security for loans. Taken together, the two components are designed to address trade finance gaps that have constrained growth, particularly for micro, small and medium enterprises (MSMEs), which typically pay between 9.5% and 12.5% for export credit.
“These interventions will address the trade finance issues of exporters,” Additional Secretary in the Commerce Ministry Ajay Bhadoo said, outlining the government’s intention to make Indian exports more competitive in global markets disrupted by higher tariffs and tighter liquidity.
The package forms the second component of the broader Rs 25,060 crore Export Promotion Mission approved late in 2025. The first component, a market access support programme with an allocation of Rs 4,531 crore, was rolled out at the end of December 2025 to help exporters expand into new markets and recover lost share in traditional destinations.
Under the interest subvention, eligible MSME exporters will receive subsidy benefits in the region of 2.75%, lowering the headline interest rate they face on rupee export credit. By narrowing the gap between domestic borrowing costs and international financing terms, officials expect the move to support exporters’ pricing competitiveness and margins.
Analysts said the package targets two of the most persistent constraints on Indian exporters: costly credit and limited collateral availability. For smaller firms that export seasonal or niche goods, access to affordable working capital is often the difference between bidding for overseas orders and sitting them out.
Implementation will be phased over six years, giving lenders and public authorities time to set up the necessary processes and eligibility checks. The government has indicated that the support will be targeted to identified sectors where the impact on employment and foreign exchange earnings could be highest.
While the measures are fiscal in nature, they form part of a policy mix that includes market access initiatives and trade diplomacy. Together, officials say, these steps aim to shore up exports against global headwinds and help Indian firms retain and grow market share abroad.
For exporters, especially MSMEs, the package promises immediate relief in borrowing costs and longer-term support through collateral facilitation. The precise operational guidelines, including the list of eligible sectors and how subsidies will be administered to banks and lending institutions, are expected to be released in the coming months.
Key Takeaways:
- Government unveils a Rs 7,295 crore support package to improve exporters’ access to credit.
- The export credit subsidy India measure includes a Rs 5,181 crore interest subvention and Rs 2,114 crore collateral support over 2025–31.
- Eligible MSME exporters may receive subsidy benefits of around 2.75%, reducing borrowing costs and improving competitiveness.
