MSMEs reeling under credit crunch

New Delhi: Exporters have sought the central government’s intervention in providing affordable and easy availability of credit to MSMEs amid global headwinds due to lack of liquidity. In a letter to Finance Minister Nirmala Sitharaman, apex exporters’ body Federation of Indian Export Organisations (FIEO) requested for the extension of Emergency Credit Linked Guarantee Scheme (ECLGS) till March 31, 2024, and restoration of interest subsidy benefit of five per cent to manufacturer MSMEs. It said some of the MSME sectors are affected due to a dip in exports on account of a global demand slowdown.

FIEO has urged extending the ECLGS till March 31, 2024, as it will help micro, small and medium enterprises sail through this difficult time and bounce back when the situation improves. “With interest rates firming up, MSMEs are getting credit at not less than 8-11 per cent. The subvention for the interest equalisation scheme was reduced as interest rates were coming down.

However, with complete change in situation, there is an urgent need to restore interest equalisation benefit of 5 per cent,” it added. MSMEs account for about 40 per cent in the country’s total exports. India’s exports declined 6.86 per cent to $34.48 billion in August, for the seventh month in a row, due to a fall in shipments from key sectors like petroleum and gems and jewellery on subdued global demand. The trade deficit (difference between imports and exports) during the month touched a 10-month high of $24.16 billion. Cumulatively, exports during April-August this fiscal contracted 11.9 per cent to $172.95 billion. India’s exports contracted 15.88 per cent in July.

Exports sectors, which recorded negative growth in August, include tea, coffee, rice, spices, leather, gems and jewellery, textiles, and petroleum products.