NITI Aayog has suggested a range of initiatives aimed at enhancing exports from micro, small, and medium enterprises (MSMEs). These measures include establishing a comprehensive trade portal, facilitating ease of merchandise exports, improving access to export finance, and establishing a centralized information hub for exporters, among other strategies.
In its report titled “Boosting Exports From MSMEs,” NITI Aayog stated that to enhance ecommerce exports, it is crucial to create a distinction between “exporter on record” (EOR) and “seller on record” (SOR), allow a reduction in invoice value without any percentage ceiling for all ecommerce exports, introduce an annual financial reconciliation process for ecommerce exporters, exempt import duties on rejects/returns, consider an exemption on reconciliation requirements for shipments up to $1000 until the “National Trade Network” (NTN) is implemented, and create a “green channel” clearance for e-commerce exports.
The report also presents six overarching recommendations aimed at boosting MSME exports, advocating for “green channel” clearances for MSME ecommerce exporters to tackle India’s lag in ecommerce utilization compared to China.
In 2022, China’s MSME ecommerce exports soared to $200 billion, significantly surpassing India’s figures. The report pinpoints intricate compliance procedures, especially payment reconciliation, as a major hurdle for small exporters.
Regarding the facilitation of merchandise exports, the Aayog has suggested easing compliance requirements for MSMEs for a limited period while implementing a system for timely disbursement of incentives. This approach aims to prevent the blocking of working capital for MSMEs.
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The Aayog underscored the notable contribution of MSMEs to employment generation, exports, and overall economic growth, highlighting that exports represent a substantial yet underutilized opportunity for the sector.
In its report, the Aayog highlighted that MSMEs make a substantial contribution to employment generation, exports, and overall economic growth.
According to the report, MSMEs play a critical role in India’s economy, offering significant employment opportunities and contributing to exports and overall growth. With over 110 million jobs and constituting 27.0% of GDP, the sector comprises approximately 64 million MSMEs, engaging 23.0% of the labor force and ranking as the second-largest employer after agriculture.
Despite their significance, MSMEs encounter difficulties accessing export markets due to their limited scale.
“However, the rise of ecommerce platforms presents an opportunity to overcome these barriers. By improving the business environment and easing regulatory hurdles, India can transform its MSME sector into a potent engine for growth,” the report said.
Despite their significance, MSMEs encounter difficulties accessing export markets due to their limited scale.
Moreover, the report underscores sectors such as handicrafts, handloom textiles, ayurveda and herbal supplements, leather goods, imitation jewellery, and wooden products as promising opportunities for Indian MSMEs in export markets, with a combined global value exceeding $340 billion.
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Furthermore, it suggests the establishment of a comprehensive national trade portal (NTN) to streamline the export process for MSMEs, enabling seamless operations and enhancing competitive advantage.
The report highlights that access to finance poses a significant challenge for MSMEs. It proposes the promotion of Export Credit Guarantee to improve working capital availability, with the goal of increasing uptake from 10% to over 50% through government incentives.
The proposal suggests the creation of a unified marketplace for export credit providers to foster competition and reduce costs for MSMEs.