Small businesses in India may soon receive a boost in their export capabilities with the Union government considering the establishment of a dedicated fund. This proposal, expected to be included in the upcoming Union budget, could see the fund have a corpus of around ₹5,000 crore. The aim is to support first-time exporters with an annual turnover of less than ₹25 crore, according to sources familiar with the matter.
Efforts to enhance the export potential of Micro, Small, and Medium Enterprises (MSMEs) are set to receive a significant push in the upcoming budget. A fund of this nature could pave the way for the establishment of export facilitation centers at the district level. These centers would assist small businesses in identifying potential markets and exploring opportunities for growth.
The fund would also play a crucial role in developing the export capacity of first-time exporters by providing them with the necessary skills to compete in international markets. This includes both business-to-business (B2B) and business-to-consumer (B2C) segments.
Boosting small businesses
Further, the fund is expected to bolster the ODOP (one district one product) scheme, which aims to promote district-specific products and enhance their value chain. With over 1,100 products from 761 districts already identified under this initiative, the fund could further streamline and support this scheme’s objectives.
While several schemes are currently in place to support MSME exports, the proposed fund could greatly benefit small businesses looking to expand their global footprint. With MSMEs contributing around 45% to India’s total exports, there is significant potential to increase this share further by enabling more businesses to tap into international markets.
A report jointly published by Niti Aayog and Foundation for Economic Development highlighted the under-utilized opportunity for MSMEs in the export sector. Despite being a vital pillar of the Indian economy, only a small percentage of MSMEs are currently engaged in exports, indicating the room for growth in this area.
Addressing the challenges faced by MSMEs in export processes, including simplifying compliances and enhancing export payments, could significantly benefit the sector. The proposed fund, coupled with broader reforms to ease MSME operations, could pave the way for a more robust export ecosystem.
Why MSMEs are being eyed
Finance minister Nirmala Sitharaman’s emphasis on making small businesses globally competitive underscores the importance of supporting MSMEs in their export endeavors. With MSMEs contributing significantly to India’s GDP and employment, enhancing their export capabilities could drive economic growth and competitiveness on a global scale.
The current focus on MSME exports comes at a critical time when India’s merchandise exports are facing challenges. By supporting MSMEs in their export journey, the government aims to empower small businesses to navigate global markets effectively and contribute to the country’s export growth.
