The first intervention introduces interest subvention on pre- and post-shipment export credit, with the objective of lowering borrowing costs and easing liquidity pressures faced by MSME exporters. Under the scheme, eligible lending institutions will provide export credit at reduced interest rates supported by government-backed subvention.
A base interest support of 2.75 percent has been notified, with provisions for additional incentives for exports to under-represented or emerging markets, subject to operational readiness. This is expected to encourage MSMEs to explore new geographies and diversify India’s export basket.
Positive List and Safeguards Built into the Scheme
The interest subvention will apply only to exports covered under a notified positive list of tariff lines at the Harmonised System six-digit level. This list covers nearly 75 percent of India’s tariff lines and reflects areas with high MSME participation.
The list has been prepared using a transparent, data-driven approach that prioritises labour-intensive and capital-intensive sectors, MSME concentration, and domestic value addition. Restricted and prohibited items, waste and scrap, and products under overlapping incentive schemes have been excluded.
Exporter Caps and Periodic Review Mechanism
To ensure equitable distribution of benefits, an exporter-wise annual cap of ₹50 lakh per Importer Exporter Code has been prescribed for FY 2025–26. The applicable interest support rates will be reviewed twice a year, in March and September, based on domestic and global financial benchmarks.
Detailed operational guidelines for the scheme will be issued by the Reserve Bank of India, with the intervention being rolled out initially as a pilot programme.
Collateral Guarantee Support to Improve Credit Access
The second intervention focuses on addressing collateral constraints that often limit MSME exporters’ access to formal credit. Under this measure, collateral guarantee support for export credit is being introduced in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The scheme provides guarantee coverage of up to 85 percent for micro and small exporters and up to 65 percent for medium exporters, with a maximum guaranteed exposure of ₹10 crore per exporter in a financial year.
Boosting Bank Lending and Export-Led Growth
The collateral guarantee initiative is designed to complement existing credit guarantee mechanisms and encourage banks to extend greater credit to export-oriented MSMEs. Detailed guidelines will be notified by CGTMSE, followed by a pilot phase and eventual integration into a revised export promotion framework.
Together, the two interventions aim to lower the cost of exporting, expand access to finance, strengthen India’s export brand, and enable MSMEs to integrate more deeply into global value chains.