Indian exporters are facing severe liquidity constraints due to rising interest rates and declining access to export finance, as highlighted by Sanjay Budhia, Chairman of the CII National Committee on EXIM. These challenges are significantly impacting the competitiveness of exporters, particularly in the manufacturing and MSME sectors.
Budhia emphasized the need for the government to extend the interest equalisation scheme, which expired on December 31, 2024, for another three years to benefit all manufacturing exporters. He also proposed raising the interest subsidy on pre- and post-shipment credit from 3% to 5% for MSME exporters, especially in key sectors such as leather, engineering, apparel, and gems and jewellery.
The Federation of Indian Export Organisations (FIEO) echoed this sentiment, urging the government to extend the scheme for five years in the upcoming Budget. They also called for an expansion of Letter of Credit facilities for large overseas projects and enhanced export credit guarantee coverage to improve financial access.
Export credit data reflects a worrying trend. Between March 2022 and March 2024, export credit declined by 5%, and priority sector lending for exports dropped over 40% within the same period. To address this, Budhia suggested that the Export Credit Guarantee Corporation of India (ECGC) increase its insurance coverage from ₹50 crore to ₹100 crore and expand its scope to include more banks.
Additionally, he called for a streamlined implementation of the Remission of Duties and Taxes on Export Products (RoDTEP) scheme. By transferring benefits directly to exporters’ accounts, administrative delays could be reduced, providing much-needed efficiency.
Commenting on potential challenges posed by US trade policies under President-elect Donald Trump, Budhia highlighted the dual impact of reciprocal tariffs on Indian goods. While such tariffs could disrupt trade flows and reduce competitiveness in price-sensitive sectors, they might also open opportunities for India to fill supply chain gaps, particularly in consumer electronics and electrical equipment.
India’s export ambitions remain high, with the government aiming to increase goods and services exports from $800 billion in 2024–25 to $2 trillion by 2030. However, as global geopolitical and trade uncertainties persist, experts emphasize the need for strategic planning to navigate potential disruptions and ensure sustainable growth in exports.
