The government is formulating schemes to provide credit on favorable terms to MSME exporters and offer assistance to address non-tariff measures imposed by other countries that have emerged as barriers to India’s merchandise exports, according to Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi, who spoke at a post-Budget webinar on Tuesday.
Sarangi revealed that the Commerce, MSME, and Finance Ministries are collaboratively developing these initiatives under the export promotion mission announced in the Union Budget for 2025-26.
The DGFT highlighted a significant gap in export credit availability, noting that as a percentage of total merchandise exports, it currently stands at only 28.5 percent in India.
The total export credit provided is estimated at USD 124.7 billion against an estimated requirement of USD 284 billion in 2023-24.
The government’s plans include promoting alternative financing instruments by strengthening factoring services for MSME exporters.
Additionally, the Budget has announced the establishment of BharatTradeNet as a unified platform for trade documentation and financing solutions.
This gap is expected to widen further, with the total export credit requirement projected to reach USD 650 billion by 2030, as goods exports are anticipated to surge to USD 1 trillion by that time.
Sarangi expressed concern about non-tariff measures being implemented by developed economies, such as the European Union’s carbon tax on steel and deforestation regulations , which restrict market access for Indian exports in those markets, compounding the challenges posed by high import tariffs.
He explained that while most non-tariff measures are domestic rules created by countries to protect human, animal, plant health, and the environment, they become trade barriers when they are arbitrary and cannot be scientifically justified.
The export market is further constricting due to aggressive industrial policies adopted by advanced nations, including the United States’ Inflation Reduction Act and Chips Act, and the United Kingdom’s advanced manufacturing plan, according to Sarangi.
He also identified the high cost of logistics as another disadvantage for Indian exports, currently amounting to 8-9 percent of GDP compared to 5-6 percent in developed nations.