Union Cabinet Clears Rs 45,000 Crore Export Promotion Mission and Credit Scheme

The Union Cabinet has approved a significant financial package totaling Rs 45,060 crore aimed at bolstering India's exports. This initiative comprises two key components: the Export Promotion Mission (EPM) and a Credit Guarantee Scheme for Exporters (CGSE).

The Export Promotion Mission, previously announced in the Union Budget, has been allocated Rs 25,060 crore for the period between FY 2025-26 and FY 2030-31. This mission is designed as a long-term strategy to enhance the export competitiveness of Micro, Small, and Medium Enterprises (MSMEs), first-time exporters, and labour-intensive industries. It aims to consolidate existing export support schemes like the Interest Equalisation Scheme (IES) and Market Access Initiative (MAI) into a more streamlined, outcome-based mechanism. Priority support will be extended to sectors such as textiles, leather, gems & jewellery, engineering goods, and marine products, which have been impacted by recent global tariff escalations, helping to sustain orders and protect jobs.

Complementing the EPM, the Credit Guarantee Scheme for Exporters will provide collateral-free credit support of up to Rs 20,000 crore. This aims to ease access to finance for exporters, thereby facilitating trade.

Impact

This news has a moderate impact on the Indian stock market, as it provides support to various export-oriented sectors like textiles, engineering, and manufacturing. Companies in these segments may see improved financial health and competitiveness, potentially leading to positive stock performance. The overall economic sentiment for trade and manufacturing could also see a slight uplift. Rating: 6/10.

Definitions:

• Union Cabinet: The highest decision-making body of the executive branch of the Government of India, composed of the Prime Minister and other senior ministers.
• Export Promotion Mission (EPM): A government initiative designed to support and increase the volume and value of a country's exports.
• Credit Guarantee Scheme for Exporters (CGSE): A scheme where the government or a designated body guarantees a loan given to an exporter, reducing the risk for lenders and making it easier for exporters to secure credit.
• MSMEs: Micro, Small, and Medium Enterprises. These are businesses classified based on their investment in plant and machinery, and annual turnover.
• Labour-intensive sectors: Industries that require a large amount of human labour relative to capital in their production process.
• Global tariff escalations: Increases in taxes or duties imposed on imported or exported goods by different countries, often as a trade policy measure.
• Interest Equalisation Scheme (IES): A scheme that provides interest subsidy on pre- and post-shipment export credit to eligible exporters.
• Market Access Initiative (MAI): A scheme to provide financial assistance to exporters for market development and promotion activities.
• Collateral-free credit: A loan provided without requiring the borrower to pledge any asset as security.