MSMEs can avail government schemes to foray into global market

At a time when India’s merchandise exports have been falling for the last seven consecutive months because of global economic slowdown, aspiring and existing MSME exporters can make use of the government schemes and emerging opportunities in niche sectors to grow their overseas business.

One such announcement is the extension of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme till June 2024 as it was earlier notified for the period ending September 30, 2023. Under this scheme, which was introduced in January 2021, the government reimburses taxes, duties and levies incurred by exporters, but which are not refunded under any other mechanism. The scheme benefits exporters of around 10,610 goods under the 8-dgit HS code.

The government also offers upto Rs. 1 lakh financial assistance to first-time exporters, under the Capacity Building of First Time MSE Exporters (CBFTE) scheme, for meeting cost incurred on quality certification and testing charges.

In the toy sector, the government’s move to reduce import dependence is bearing fruit as there is a 52% decline in toy imports and six-fold growth in exports in the last nine years, as per a recent statement by the Union MSME Minister.

Electronics is another promising sector to support MSMEs as there are lot of components and sub-assemblies produced by small and medium enterprises in consumer electronic products such as smartphones, communication routers, televisions, refrigerators and home appliances. According to industry players, MSMEs in the sector need policy support for investment and design-led manufacturing to become globally competitive.

E-commerce is another high potential channel to promote MSME exports in handicrafts, textile, leather, footwear and consumer products.? According to the global shipping and logistics firm UPS, the number of small businesses exporting to three or more markets has grown in double-digit ?between 2020 and 2022.

The following table highlights the key measures taken or being considered by the government to promote local manufacturing and exports, especially from the MSME sector.

Apart from the above, the government has also introduced various schemes such as Production Linked Incentive Scheme, MSME Innovative Scheme, Zero Defect Zero Effect and International Cooperation Scheme, which will directly and indirectly support exports from the MSME sector. Effective implementation of these measures may arrest the declining share of MSMEs in exports, as currently they contribute 43% to merchandise exports compared to 49.4% in 2020-21.