Export Promotion Mission Schemes: ₹5,181 Cr Credit-Linked Boost for MSME Exporters Till 2030-31
The Indian government has launched two credit-linked capital subsidy schemes with a ₹5,181 crore outlay to reduce credit costs for MSME exporters, operating until 2030-31 and boosting India’s export competitiveness.
Background: India’s Export Challenges for MSMEs
MSMEs contribute over 45% of India’s total exports but face high credit costs and limited access to affordable finance, hindering global competitiveness. These challenges intensified post-COVID amid rising input costs, logistics expenses, and trade uncertainties.
The government’s Export Promotion Mission addresses this through targeted interventions, aligning to achieve $2 trillion in goods and services exports by 2030 under the Foreign Trade Policy 2023.
Launch of Two Credit-Linked Schemes
On January 1, 2026, the Union Cabinet approved two new credit-linked capital subsidy (CLCS) schemes with a total outlay of ₹5,181 crore to operate from FY 2026-27 to 2030-31. These schemes aim to lower the cost of capital for MSME exporters by providing interest subvention and capital subsidies on term loans for machinery and equipment.
Administered through the Ministry of Commerce & Industry via the Export Promotion Council for MSMEs (EPCMS), the schemes target sectors like textiles, leather, engineering goods, plastics and food processing where MSMEs dominate export supply chains.
Key Features of the Schemes
- Scheme 1: Credit-Linked Capital Subsidy for Technology Upgradation (CLCS-TU) offers up to 15% capital subsidy on eligible plant and machinery costs, capped at ₹1.5 crore per unit, for exporters adopting Industry 4.0 technologies. This builds on the existing TU scheme but adds export performance linkage requiring a minimum 20% export growth annually.
- Scheme 2: Interest Subvention for Export Credit provides 3% interest equalisation on working capital loans up to ₹2 crore per MSME for a maximum of 7 years. Eligible MSMEs must demonstrate export turnover of at least ₹1 crore in the previous year and maintain it during the scheme period.
Both schemes emphasise green technologies, with an additional 2% subsidy for machinery meeting energy efficiency standards or using renewable energy sources.
Objectives and Coverage
The primary goal is to reduce the effective interest rate burden from 12-14% to 8-10% for MSME exporters, enabling competitive pricing in markets like EU, US and ASEAN. Coverage extends to over 1 lakh MSMEs with the potential to support 5-7% incremental export growth annually.
Integration with the International Trade Portal and ECGC ensures seamless application processing and risk coverage, while district export hubs provide handholding for first-time exporters among MSMEs.
Significance for MSME Exporters
- Cost Reduction: Direct lowering of credit costs improves cash flow, allowing MSMEs to invest in capacity expansion, R&D, and market diversification without compromising margins.
- Technology Adoption: Capital subsidies accelerate modernisation, helping MSMEs meet stringent international standards for quality, sustainability, and compliance.
- Export Diversification: Interest subvention on working capital supports entry into high-value markets and product segments, reducing dependence on traditional destinations.
- Employment Generation: Enhanced competitiveness is expected to create 10-15 lakh direct jobs in MSME clusters over five years, particularly in labour-intensive sectors.
Implementation Mechanism
Applications will be processed online through the EPCMS portal with real-time tracking and Aadhaar-eKYC integration. Banks designated as nodal agencies (PSU banks initially) will disburse subsidies on a first-come, first-served basis within 30 days of loan sanction.
Annual performance audits and export data validation through ICEGATE ensure scheme integrity. The government has allocated ₹1,000 crore as initial corpus with provisions for additional funding based on uptake.
Relevance for UPSC and Competitive Exams
These schemes are crucial for GS Paper 3 (Economy) under topics like government interventions, MSME development, foreign trade policy and inclusive growth. They exemplify the government’s strategy of credit-linked incentives over direct cash transfers.
For Mains, link to broader themes: Atmanirbhar Bharat, production-linked incentives, challenges in MSME formalisation, and India’s position in global value chains. Prelims may test the scheme outlay, duration and nodal ministry.
FAQs on Export Promotion Mission Schemes
Q1: What is the total outlay and duration of these schemes?
The two credit-linked schemes have a combined outlay of ₹5,181 crore and will run from FY 2026-27 to 2030-31, covering five financial years.
Q2: Which MSMEs are eligible to avail these benefits?
MSMEs registered on the Udyam portal with a minimum ₹1 crore export turnover in the previous year and engaged in the manufacturing/export sectors notified under the schemes qualify. Priority for women-led and SC/ST-owned enterprises.
Q3: How do these schemes differ from existing export promotion measures?
Unlike broad-based RoDTEP or duty drawback, these are MSME-specific, credit-linked interventions focusing on capital cost reduction rather than duty refunds, with technology upgradation as a key differentiator.
Q4: What is the maximum subsidy under each scheme?
CLCS-TU offers up to ₹1.5 crore capital subsidy (15% of machinery cost); Interest Subvention provides 3% equalisation on loans up to ₹2 crore for 7 years, reducing effective rates significantly.
Q5: How will the government ensure additionality and prevent misuse?
Export performance linkage (20% YoY growth), third-party audits, ICEGATE data cross-verification and bank-level due diligence ensure benefits reach genuine incremental exporters.
Q6: Which sectors will benefit most from these schemes?
Textiles, leather, engineering goods, plastics, food processing and auto components, where MSMEs contribute 40-60% of exports and face high capital intensity, will see maximum impact.
Q7: Can service exporters avail these schemes?
No, these schemes target goods exporters only. Service MSMEs can leverage separate initiatives under the Service Export Promotion Council (SEPC).
Q8: What is the role of Export Promotion Councils?
EPCs like EPCMS act as nodal agencies for application processing, sector-specific guidance, capacity building, and performance monitoring under the schemes.
