India’s Micro, Small, and Medium Enterprises (MSMEs) Export Schemes

India’s Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the nation’s economy, contributing significantly to exports, employment generation, and overall economic growth. To further boost their potential in the global market, the Indian government has introduced several schemes specifically designed to support MSME exporters. These schemes aim to provide financial assistance, enhance market access, and facilitate the adoption of modern technologies. This article explores the various MSME schemes available for exporters, detailing their features, benefits, and application processes.

1. Export Promotion Capital Goods (EPCG) Scheme

Overview:

The EPCG Scheme allows MSME exporters to import capital goods at zero customs duty, provided they fulfil an export obligation equivalent to six times the duty saved on the capital goods imported, within six years from the date of issuance of the authorization.

Key Features:

• Zero customs duty on import of capital goods.
• The export obligation is equivalent to six times the duty saved.
• Authorization is valid for six years.

Benefits:

• Reduces the cost of acquiring capital goods.
• Encourages modernization and technological upgradation.
• Boosts export competitiveness by lowering production costs.

Application Process:

• Apply through the Directorate General of Foreign Trade (DGFT) online portal.
• Submit the required documents, including a detailed project report.
• Upon approval, an EPCG authorization is issued, allowing duty-free import of capital goods.

2. Merchandise Exports from India Scheme (MEIS)

Overview:

The MEIS scheme provides financial incentives to MSME exporters to offset infrastructural inefficiencies and associated costs. The incentives are provided as a percentage of the realized Free on Board (FOB) value of exports.

Key Features:

• Financial incentives range from 2% to 5% of the FOB value of exports.
• Incentives are issued in the form of duty credit scrips, which can be used for payment of customs duty.
• Wide range of eligible export products.

Benefits:

• Enhances the profitability of MSME exporters.
• Offsets infrastructural and logistics costs.
• Increases export competitiveness.

Application Process:

• Apply through the DGFT online portal.
• Submit shipping bills, e-BRC, and other relevant export documents.
• Upon verification, duty credit scrips are issued.

3. Export Credit Guarantee Corporation (ECGC) Scheme

Overview:

The ECGC scheme provides credit insurance to MSME exporters against risks of non-payment by foreign buyers. This scheme helps exporters to extend credit to overseas buyers without the fear of loss due to non-payment.

Key Features:

• Insurance covers commercial and political risks.
• Various types of policies to suit different export needs.
• Covers up to 90% of the loss incurred due to non-payment.

Benefits:

• Reduces the risk of non-payment by foreign buyers.
• Encourages exporters to explore new and emerging markets.
• Enhances the confidence of exporters in extending credit.

Application Process:

• Apply through the ECGC website or authorized agents.
• Choose the appropriate insurance policy based on export requirements.
• Submit the necessary documents and pay the premium.
• Receive the insurance policy and coverage.

4. Market Development Assistance (MDA) Scheme

Overview:

The MDA scheme provides financial assistance to MSME exporters for participation in international trade fairs, exhibitions, and buyer-seller meets. It aims to promote MSME products in global markets and enhance market access.

Key Features:

• Financial assistance for participation in international trade fairs and exhibitions.
• Assistance for publicity and market studies abroad.
• Reimbursement of airfares and space rent.

Benefits:

• Increases visibility of MSME products in global markets.
• Facilitates market exploration and business networking.
• Reduces the financial burden of international marketing activities.

Application Process:

• Apply through the Export Promotion Councils (EPCs) or Commodity Boards.
• Submit the application form along with details of the event.
• Upon approval, receive financial assistance and reimbursement.

5. Interest Equalization Scheme (IES)

Overview:

The IES scheme provides an interest subsidy to MSME exporters to reduce the cost of pre and post-shipment export credit. This scheme is aimed at making credit affordable and improving the liquidity of MSME exporters.

Key Features:

• Interest subsidy of 5% on pre and post-shipment export credit.
• Applicable for all MSME exporters and specified agricultural products.
• Direct transfer of subsidy to the lender, reducing the interest rate for the borrower.

Benefits:

• Reduces the cost of export finance.
• Improves cash flow and liquidity for MSME exporters.
• Encourages competitiveness by lowering financial costs.

Application Process:

• Apply through the lending bank.
• Submit the necessary export documents and proof of shipment.
• The bank processes the interest subsidy and adjusts it against the interest payable.

Conclusion

The Indian government’s commitment to empowering MSME exporters is evident through these comprehensive schemes designed to provide financial assistance, reduce risks, and enhance market access. By leveraging these schemes, MSME exporters can overcome challenges, explore new markets, and significantly contribute to India’s export growth and economic development. Entrepreneurs are encouraged to utilize these schemes to maximize their export potential and drive sustainable business growth. For more information and assistance, MSME exporters can visit the official websites of the respective schemes or consult with export promotion councils and financial institutions.