Government Schemes to Support Exporters
The Union government has introduced two new schemes aimed at providing relief to exporters and enhancing their competitiveness amid global economic uncertainties driven by changes in US trade policy.
Impact of US Trade Policy
The shift in US trade policy has led to economic uncertainties, significantly affecting India due to a 50% tariff. Although President Trump mentioned nearing a fair deal with India, the situation remains unpredictable, complicating planning for small and medium-sized enterprises (SMEs).
Credit-Guarantee Scheme for Exporters
- This scheme offers additional financial support to exporters, including micro, small, and medium enterprises (MSMEs).
- Provides collateral-free credit, improving liquidity and operational strength.
- Helps businesses survive during reduced demand periods, crucial until a US trade deal is finalized.
- Government guarantees limit lenders' risks, with a support ceiling of ₹20,000 crore, subject to increase if necessary.
Export Promotion Mission
With an outlay of ₹25,060 crore, this mission targets medium-term support running till 2030-31. Initially announced in the Union Budget, it consists of two integrated sub-schemes:
- Focuses on affordable credit and related issues for MSMEs.
- Emphasizes non-financial support like transport, branding, and quality compliance.
Success depends on effective implementation, as businesses often lack awareness and need guidance.
Broader Trade and Economic Issues
While securing a trade deal with the US is a priority, India must also address fundamental trade issues, such as:
- India's reluctance towards trade agreements, leading to high tariff and non-tariff barriers.
- Exclusion from large mega-regional trade agreements, hindering global and regional value chain participation.
- The need to enhance competitiveness and accelerate reform pace to support economic growth and job creation.
Regional trade agreements offer rule-based trading environments that could benefit India in the long run.
