The MSME (Micro, Small, and Medium Enterprises) sector plays a crucial role in driving economic growth. Recognizing its significance, Cabinet Minister Piyush Goyal recently urged bankers to provide enhanced and affordable credit to MSMEs in order to achieve the ambitious target of 1 trillion dollars in merchandise exports. This article delves into the importance of promoting the MSME sector and highlights the key discussions from the meeting chaired by Piyush Goyal.
Meeting on Export Credit: Empowering MSME Exporters
In a significant development, Piyush Goyal, the Cabinet Minister, chaired a meeting with bankers to discuss export credit for MSME exporters. The objective of the meeting was to explore avenues to increase the availability of export credit and support MSMEs in expanding their export capabilities. The Department of Commerce, in collaboration with the Export Credit Guarantee Corporation Limited (ECGC), organized the meeting in New Delhi.
What were the key discussions in the meeting on export credit chaired by Piyush Goyal?
During the meeting, CMD ECGC, M. Senthilnathan, delivered a presentation on 'Export Credit and Export Credit Insurance for Banks (ECIB).' Drawing from ECGC's experience under the enhanced cover scheme, several modifications were proposed to ensure sufficient and affordable credit for a wider range of MSME exporters. These proposed modifications aimed to treat borrower accounts as 'AA' rated accounts, consequently reducing the cost of export credit for exporters.
Expanding the Scope: Extending Benefits to All Banks
Piyush Goyal emphasized the need for expanding the benefits of the proposed scheme to all banks. By doing so, the offtake of export credit for MSME exporters can be significantly increased. This extension would empower a greater number of exporters to access credit facilities and leverage them to fuel their growth.
Adopting Best Practices: Suggestions from Bankers
Bankers present at the meeting recommended that ECGC should adopt a claim processing method similar to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Acknowledging the merit of this suggestion, the Commerce and Industry Minister advised ECGC to follow a similar pattern to compensate for losses, thereby fostering a supportive environment for MSME exporters.
How is Cabinet Minister Piyush Goyal promoting enhanced & affordable credit for MSMEs?
Piyush Goyal urged banks to capitalize on the proposed scheme and extend adequate and affordable export credit to MSME exporters. This strategic step holds the potential to propel the country towards achieving its ambitious target of 1 trillion dollars in merchandise exports by 2030. Furthermore, the Minister advised ECGC to expedite claim payments to banks under the ECIB scheme, with a target of 75% claim payment within 45 days of receiving the claim.
Why is MSME important?
In India, MSMEs play a strategic role in the country's economic development. They contribute nearly 33% to India's GDP and employ over 110 million people across approximately 63 million enterprises. Additionally, they are responsible for producing 45% of India's manufactured goods, contributing to over 50% of total exports. MSMEs in India manufacture over 8,000 products with added value, ranging from traditional to advanced tech items.
What measures are being taken to streamline ECGC services through digitization?
In a bid to minimize physical interaction and enhance efficiency, Piyush Goyal announced the digitization of all ECGC services within the next four months. This transformative step will enable smoother transactions and facilitate seamless communication between the various stakeholders involved in export credit processes.
The promotion and support of the MSME sector are paramount for the growth of any economy. Cabinet Minister Piyush Goyal's call for enhanced and affordable credit to MSMEs reflects the government's commitment to empowering these enterprises. The meeting with bankers highlighted the importance of expanding export credit availability and adopting best practices to ensure the smooth functioning of credit facilities. By embracing these initiatives and leveraging the proposed scheme, MSME exporters can thrive, contributing significantly to India's journey towards achieving the remarkable goal of 1 trillion dollars in merchandise exports by 2030.