Recent Government Schemes for Export Promotion

Last week, the government announced two major initiatives to boost exports: the Export Promotion Mission (EPM) with a budget of ₹25,060 crore and the Credit Guarantee Scheme for Exporters (CGSE) 

Previous Challenges

Despite similar initiatives in the past, the compounded annual growth rate (CAGR) in exports has not exceeded 3%, nor has the share of global merchandise exports increased beyond 1.8% in the last 11 years. Previous schemes, like the Remission of Duties and Taxes on Export Products (RoDTEP), were not fully funded, with actual disbursements significantly lower than announced amounts.

Details of the Export Promotion Mission (EPM)

• The EPM consolidates schemes like the Interest Equalisation Scheme (IES) and Market Access Initiative (MAI).
• It aims to simplify administration and offers two main components: 
  • Niryat Protsahan: Provides affordable credit to exporters.
  • Niryat Disha: Supports marketing efforts.
• Implementation will be managed by the Directorate General of Foreign Trade (DGFT).
• It may particularly benefit small exporters lacking financial resources.

Details of the Credit Guarantee Scheme for Exporters (CGSE)

• Provides 100% credit guarantee coverage via the National Credit Guarantee Trustee Company Limited (NCGTC).
• Aims to extend collateral-free loans to eligible exporters to diversify and expand markets.
• Exporters affected by US tariff hikes or exploring new markets may benefit.
• Success depends on lenders' willingness to offer loans despite credit guarantees.

Challenges and Recommendations

The poor export performance is attributed to competitiveness issues, such as scale limitations, high logistics, documentation, and transaction costs, and regulatory inefficiencies. Competing economies support exporters via ecosystems facilitating cross-border goods movement and trade facilitation, not solely subsidies.

The government is advised to deregulate, review protectionist policies, and reconsider its absence from the Regional Comprehensive Economic Partnership (RCEP). Effective solutions should address the root causes rather than merely alleviating symptoms with taxpayer funds.