India relaxes export credit norms, extends MSME benefits

India eases export credit rules, extends benefits to graduating MSMEs

New Delhi: India has revised its export credit framework to strengthen support for MSMEs as they scale up operations, introducing key changes under the Export Promotion Mission – Niryat Protsahan.

The most significant reform allows exporters who move out of the MSME category due to higher turnover or investment to continue receiving interest subvention benefits for three years after reclassification, subject to conditions. The move is aimed at ensuring a smoother transition for growing businesses.

According to DGFT Trade Notice No. 22/2025–26 dated January 16, 2026, the amended guidelines for interest subvention on pre- and post-shipment export credit are widely viewed as MSME-friendly.

Earlier, exporters lost access to such benefits immediately upon crossing MSME thresholds, often creating a sudden strain on working capital at a critical stage of expansion. The new three-year transition window is expected to provide continuity, reduce uncertainty, and encourage capacity expansion.

The notification further clarifies that revised interest subvention rates will apply only to export credit sanctioned after the issuance date, while existing loans will continue under previously applicable rates. This removes retrospective uncertainty and improves financial planning stability for exporters.

In another supportive measure, the DGFT has confirmed that for FY 2025–26, the full annual interest subvention ceiling will apply regardless of when export credit is sanctioned or utilised during the year, benefiting MSMEs accessing finance mid-year.

By linking subvention support to actual interest costs and simplifying reimbursement mechanisms for banks, the revised framework aims to ease working capital constraints and improve credit flow to exporters.

Overall, the policy marks a shift from restricting benefits based on size thresholds to supporting MSMEs through their growth journey into larger export-oriented enterprises.