Facilitating Indian Export Growth: The Impact of MSME Schemes and Subsidies

By Mr. Sribash Dasmohapatra

Micro, Small, and Medium Enterprises (MSMEs) constitute a vital component of India’s manufacturing and export ecosystem, contributing significantly to economic growth and employment generation. The sector has witnessed remarkable growth and resilience and the realization of India’s $5-trillion economy aspiration hinges significantly on its active participation. By empowering MSMEs with pertinent resources, the Govt today, aims to foster an environment conducive to their growth and, consequently, propel the nation towards its ambitious economic goals.

At the forefront of India’s leap to its position as the world’s fifth largest economy today, lies India’s vast advancements in technology. Today, MSMEs are increasingly embracing technology to drive efficiency and scale. Trends like data-backed decision-making and improved cash flow management through tech adoption are becoming prevalent, enhancing the competitiveness of MSMEs.

There is a growing emphasis on enhancing export capabilities among MSMEs, particularly in sectors like plastics. With guidance from Export Promotion Councils (EPCs) and access to government incentives, MSME exporters are tapping into global markets and experiencing positive growth trajectories.

The Indian government has demonstrated a strong commitment to supporting MSMEs through various initiatives and subsidies. Budget allocations have increased significantly, and schemes like the Emergency Credit Line Guarantee Scheme (ECLGS) have provided crucial financial assistance to MSMEs during challenging times.

Innovation, capacity building and skill development initiatives are further empowering MSMEs to adapt to changing market dynamics and enhance their competitiveness. Collaboration between government agencies and private sector stakeholders is facilitating practical training and education for MSMEs.

How MSME Schemes & Incentives are Shaping the Future of MSME Exports

In recent years, the Indian government has implemented various schemes and subsidies aimed at supporting MSME exporters and enhancing their competitiveness in the global market. Some of these include:

MSME Champions Scheme:

Designed to enhance competitiveness among MSMEs through sustainable, competitive, and innovative practices. Components like MSME-Sustainable (ZED) encourage waste reduction and lean manufacturing, while MSME-Competitive (Lean) focuses on design improvement and intellectual property rights awareness. MSMEs participating in these schemes gain access to national and global markets, fostering export growth.

Production Linked Incentive (PLI) Schemes:

With a significant outlay aimed at boosting manufacturing and exports, PLI schemes provide financial incentives to eligible MSMEs. MSMEs in the plastics industry can benefit from these schemes by enhancing production capacities and meeting export targets.

Export Promotion Schemes:

MSME exporters can leverage existing export promotion schemes through EPCs to access financial assistance, market development support, and export facilitation services. These schemes enable MSMEs to expand their presence in international markets and capitalize on export opportunities. Promotion of ‘Brand India’ and Indian products by EPCs by facilitating participation through Market Access Initiative (MAI), International Cooperation Scheme by MSME Ministry, etc at international trade fairs, exhibitions, and marketing campaigns boosts the visibility and competitiveness of MSME exporters.

Tax Benefits:

Government offers tax benefits to MSME exporters, including exemptions, deductions, and reduced tax rates. These incentives such as RoDTEP, RoSCTL, etc have been designed to lower the tax burden on MSMEs, freeing up resources for investment in technology, innovation, and market expansion.

Skill Development Programs:

Government-funded skill development programs equip MSMEs with the necessary capabilities to enhance export readiness and competitiveness. By investing in workforce development, MSMEs can improve productivity, quality, and innovation, driving export growth.

India’s Foreign Trade Policies:

In addition to specific schemes and subsidies, India’s Foreign Trade policies play a crucial role in supporting MSME exporters. India’s participation in trade agreements and regional economic partnerships opens up new markets and trade opportunities for MSMEs.

Trade Facilitation Measures:

Simplified export procedures, reduced documentation requirements, and streamlined customs clearance processes facilitate MSME exports.

MSME schemes and subsidies have been instrumental in bolstering Indian exporters and fostering significant growth in recent years. These initiatives have empowered MSMEs to seize export opportunities and compete effectively in the global market. In the realm of plastics, where import substitution stands at an impressive Rs. 37,500 crores and India’s share of the global plastics trade is a mere 1.1%. However, considering that the vast majority of Indian plastics processors belong to the MSME sector, the potential for growth is immense. With the right vision and strategic approach, MSMEs in the plastics industry can tap into this vast potential and expand their presence on the global stage.


(The author is Mr. Sribash Dasmohapatra, Executive Director of Plexconcil, and the views expressed in this article are his own)