Government Launches Two New Credit-Linked Schemes to Boost Exports and MSMEs
Government introduces two credit-linked schemes to boost exports, especially for MSMEs, under the Export Promotion Mission.
Photo by 郭 启俊
The government has unveiled two new credit-linked schemes under its Export Promotion Mission, specifically designed to support exporters, particularly Micro, Small, and Medium Enterprises (MSMEs). These schemes, implemented through the Export Credit Guarantee Corporation of India (ECGC) and EXIM Bank, aim to address the critical challenge of access to finance for exporters.
Key features include interest subvention, credit guarantees, and simplified procedures to ensure timely and affordable credit. This initiative is vital for India's goal of increasing its share in global trade, boosting domestic manufacturing, and creating employment opportunities, aligning with the 'Make in India' and 'Atmanirbhar Bharat' visions.
मुख्य तथ्य
Government unveiled 2 new credit-linked schemes
Part of Export Promotion Mission
Implemented through ECGC and EXIM Bank
Aims to support MSME exporters
Features: Interest subvention, credit guarantees
UPSC परीक्षा के दृष्टिकोण
Role and functions of specialized financial institutions (EXIM Bank, ECGC)
Government schemes for export promotion and MSME development
Concepts of interest subvention and credit guarantees in financial markets
Impact of trade policies and credit access on India's global trade share and economic growth
Interlinkages between 'Make in India', 'Atmanirbhar Bharat', and export promotion
दृश्य सामग्री
Process Flow: New Credit-Linked Export Schemes for MSMEs
This flowchart illustrates the simplified process for MSME exporters to access credit under the newly launched government schemes, highlighting the roles of banks, ECGC, and EXIM Bank in facilitating finance and mitigating risks.
- 1.MSME Exporter Identifies Export Order
- 2.Applies for Pre/Post-Shipment Credit from Bank
- 3.Bank Assesses Application & Creditworthiness
- 4.Bank Seeks Credit Guarantee (from ECGC) OR Refinance/Co-financing (from EXIM Bank)
- 5.ECGC Provides Credit Guarantee to Bank (reducing bank's risk)
- 6.EXIM Bank Provides Refinance/Co-financing to Bank (enhancing liquidity)
- 7.Government Provides Interest Subvention to Bank (reducing exporter's interest cost)
- 8.Bank Disburses Timely & Affordable Credit to MSME Exporter
- 9.MSME Exporter Executes Order & Boosts Exports
MSME Sector: Economic Contribution & Export Potential (2025-26 Estimates)
This dashboard highlights the significant contribution of the MSME sector to India's economy and exports, underscoring the strategic importance of new credit-linked schemes to further leverage this potential.
- Share in GDP
- Approx. 30%
- Share in Manufacturing Output
- Approx. 45%
- Share in India's Exports
- Approx. 48%
- Employment Generation
- Over 12 Crore
MSMEs are a backbone of the Indian economy, contributing significantly to national income. Government aims to increase this further.
MSMEs drive industrial production, particularly in diverse sectors, aligning with 'Make in India' goals.
MSMEs are critical for India's global trade ambitions. Credit-linked schemes directly target this segment to boost export competitiveness.
MSMEs are the second-largest employer after agriculture, vital for inclusive growth and demographic dividend.
और जानकारी
पृष्ठभूमि
नवीनतम घटनाक्रम
बहुविकल्पीय प्रश्न (MCQ)
1. Consider the following statements regarding the Export Credit Guarantee Corporation of India (ECGC) and EXIM Bank of India: 1. ECGC is a statutory body primarily providing export credit insurance and guarantee services to Indian exporters. 2. EXIM Bank of India functions as the principal financial institution for coordinating the working of institutions engaged in financing exports and imports. 3. Both ECGC and EXIM Bank are classified as Development Financial Institutions (DFIs) by the Reserve Bank of India. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: A
Statement 1 is correct: ECGC is a statutory body (under the Ministry of Commerce & Industry) that provides export credit insurance and guarantees to protect Indian exporters against non-payment risks from overseas buyers and to enable banks to offer credit to exporters. Statement 2 is correct: EXIM Bank is indeed the principal financial institution for coordinating export-import financing. Statement 3 is incorrect: While EXIM Bank is a DFI, ECGC is primarily an export credit insurer and guarantee provider, not typically classified as a DFI in the same vein as EXIM, NABARD, or SIDBI, which provide direct long-term finance for development projects. ECGC's role is more akin to an insurance company facilitating trade credit.
2. In the context of government initiatives to boost exports and MSMEs, consider the following statements: 1. Interest subvention schemes aim to reduce the effective interest rate for borrowers, thereby lowering their cost of credit. 2. Credit guarantee schemes primarily protect the borrower from default risk, making it easier for them to obtain loans. 3. The 'Make in India' initiative focuses solely on promoting domestic manufacturing for import substitution, without a significant emphasis on exports. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: A
Statement 1 is correct: Interest subvention is a direct subsidy on interest payments, reducing the burden on the borrower. Statement 2 is incorrect: Credit guarantee schemes primarily protect the *lender* (banks/financial institutions) from default risk, encouraging them to extend credit to borrowers who might otherwise be considered risky. While it indirectly benefits the borrower by making credit more accessible, its direct protection is for the lender. Statement 3 is incorrect: The 'Make in India' initiative aims to boost domestic manufacturing not only for import substitution but also significantly for making India a global manufacturing hub and increasing its share in global exports. The news itself states the schemes align with 'Make in India' and 'Atmanirbhar Bharat' to increase India's share in global trade.
3. Which of the following is NOT a typical challenge faced by Micro, Small, and Medium Enterprises (MSMEs) in India while engaging in international trade?
उत्तर देखें
सही उत्तर: C
Options A, B, and D represent common and significant challenges faced by MSMEs in international trade. Access to finance (A) is explicitly mentioned in the news as a critical challenge. Compliance with international standards (B) and navigating complex trade regulations (D) are also well-known hurdles. Option C, 'Lack of adequate domestic demand for their products, forcing them to look for export markets,' is generally NOT a typical or primary challenge. While some specific sectors might face this, MSMEs often struggle to meet *existing* domestic demand due to capacity constraints or focus on niche markets. The primary driver for MSMEs to export is often growth, diversification, and tapping into larger global markets, rather than a lack of domestic demand forcing them to export. In fact, robust domestic demand can sometimes make MSMEs less inclined to export due to the complexities involved.