Exporters await clarity as only Rs 2,600 crore likely left under Export Promotion Mission in FY26

The Mission aims to particularly help those sectors disproportionally impacted by steep 50 percent tariffs imposed by the United States, effective August 27.

Exporters are adopting a wait-and-watch approach as they await clarity on the contours of the government’s new Export Promotion Mission (EPM), approved by the Cabinet on November 12 and pegged at around Rs 4,200 crore for FY26.

However, industry sources said they were informed that a sizeable portion, around Rs 1,600 crore, may first be used to clear pending dues under older schemes such as the Market Access Initiative (MAI) and the Interest Equalisation Scheme (IES), leaving limited fresh funds for this fiscal.

To be sure, past dues are typically not settled through a scheme that takes effect from a later period, in this case FY26. The central government is yet to formally notify the Mission.

Global Trade Research Initiative’s (GTRI) Ajay Srivastava points out that the overall funding is a concern since the Mission's total outlay of Rs 25,060 crore is spread over six years. “Last year alone, the Interest Equalisation Scheme cost more than Rs 3,500 crore, leaving very limited funds for the many activities, such as branding, packaging, trade fairs, compliance, and logistics.”

“Another issue is the slowdown in rollout… eight months of 2025–26 have already passed. Older programmes like MAI and IES, which operated until last year, have made no payouts this year, leaving exporters unsupported during a difficult global environment,” Srivastava said.

First announced in the 2025–26 Budget with an outlay of Rs 2,250 crore, the Mission now carries a higher allocation and will run for five additional years, until 2030–31.

The EPM aims to boost MSME exports through Niryat Protsahan for affordable trade finance and Niryat Disha for non-financial support such as quality, branding, logistics, and capacity-building.

Ashwin Chandran, Chairman of the Confederation of Indian Textile Industry (CITI) told Moneycontrol that any move that boosts exports is welcome. “What we really want to see are the finer details of how the Export Promotion Mission will be implemented. In the backdrop of the current export slowdown, this is a positive step.”

Chandran added, the final amount disbursed under the Mission for FY26 will depend on whether any extension is granted for past dues or separate compensation is provided.

GTRI’s Srivastava also warned of institutional challenges.

“DGFT (Directorate General of Foreign Trade) has been appointed the implementing agency, but key financial schemes like interest subvention were earlier run by banks under RBI’s supervision. Banks link such disbursements with pre and post shipment finance. DGFT will need to invest in new learning to discharge this function. This may slow approvals and create operational delays,” Srivastava added.

Sectoral Focus

The Mission aims to particularly help those sectors disproportionally impacted by steep 50 percent tariffs imposed by the United States, effective August 27. These include, textiles, leather, gems & jewellery, engineering goods and marine products.

An industry source said special attention has been given to labour-intensive exports, including engineering goods. However, questions remain about how the funds will be divided among these sectors. “Ideally, engineering goods account for the largest share. All the other four sectors together don’t match its size, so this sector should ideally receive around 50 percent of the total allocation,” the person said.

At $116.54 billion in FY25, engineering goods made up the largest share of India’s outbound shipments, nearly 27 percent of the total. The product also remained the top export category to the United States.

Labour-intensive goods bore the brunt of Trump’s 50 percent tariff, with export growth of gems and jewellery moderating to 0.40 percent on-year at $2.8 billion in September versus 15.6 percent in August.

In September, outbound shipment of textiles and apparels contracted by over 10 percent on-year to $1.6 billion and $997.5 million, respectively, a sharper decline compared to August, when the drop was less than 3 percent for both categories.

Overall shipments of engineering goods, India’s top export to the US, saw a moderation in growth to 2.9 percent on-year at $10.1 billion in September versus a rise of nearly 5 percent in August.

Credit Guarantee Scheme

Apart from EPM, the Cabinet on November 12 also cleared a Credit Guarantee Scheme for Exporters (CGSE), which will provide full credit guarantee coverage to banks for up to Rs 20,000 crore in additional loans to eligible exporters, including MSMEs.

On this too, exporters need more details. The new Credit Guarantee Scheme for Exporters refers to the total corpus or overall ceiling for guarantees, not an individual cap.

Sources say that while the scheme will make it easier for exports to access finance, it is not going to offer them significantly more attractive rates of interests.

“That said, it does provide reassurance to banks and may improve exporters’ ability to obtain loans. Typically, there’s a cap per exporter on such guarantees, likely linked to business size, though the specifics aren’t known yet. I expect a cap to be introduced once the modalities are finalised,” one of the sources said.

NPA Noose

Sources also indicated that the newly unveiled Credit Guarantee Scheme for Exporters is unlikely to cover accounts of small exporters that have already been classified as non-performing assets (NPAs).

Trump’s tariffs have prompted several American buyers of Indian exports, especially textiles, to either delay the shipment or cancel them altogether, leaving Indian MSME units with unsold inventory, pending payments and facing a liquidity squeeze, Moneycontrol reported earlier.

This has resulted in delayed payments to banks, exceeding 90 days in some cases, thus causing certain exporters’ accounts to be classified as non-performing assets while many others are at risk of facing the NPA tag.

As per the Reserve Bank of India, a loan or advance is classified as a NPA when interest or principal payments are overdue for more than 90 days, in case of a term loan. These norms also apply to other forms of credit such as overdrafts and trade bills.

For many, the modalities and timeline of implementation for both the Export Promotion Mission (EPM) and the Credit Guarantee Scheme will be key to ensuring effective utilisation.

As GTRI’s Srivastava says, “…the success will depend on quickly issuing detailed guidelines, ensuring adequate funding, and building strong coordination mechanisms. Without rapid operationalisation, exporters, especially MSMEs, may continue to struggle in a challenging global trade environment.”