The ₹25,060 Crore Gamble on Exports: Can the Export Promotion Mission Deliver?
₹25,060 crore. That is the size of the Union Government’s financial commitment under the Export Promotion Mission (EPM), unveiled in the 2025-26 Budget as a six-year strategy to bolster inclusivity and competitiveness in India's exports. The policy specifically targets labour-intensive sectors like textiles, leather goods, and gems & jewellery that are reeling under escalating global tariffs and worsening non-tariff barriers. At the heart of EPM are twin sub-schemes: Niryat Protsahan (focused on financial support) and Niryat Disha (non-financial facilitation). But beyond the headlines touting the plan as "transformational," the brass tacks reveal a deeply complex challenge.
The Policy Instrument: High-Tech Dreams, Bureaucratic Foundations
The Export Promotion Mission is anchored in a multi-institutional framework. The Directorate General of Foreign Trade (DGFT), best known for implementing trade policy through its licensing mechanisms, has been tasked as the nodal agency. To smooth operations, DGFT will leverage a dedicated digital platform, integrated with existing systems like the ICEGATE used for customs clearances. The mission promises fiscal interventions under Niryat Protsahan, such as the Credit Guarantee Scheme for Exporters (CGSE), which extends ₹20,000 crore of collateral-free credit via the National Credit Guarantee Trustee Company Ltd. Meanwhile, Niryat Disha tackles softer interventions like compliance assistance for non-tariff measures (aligned to WTO standards), funding for international exhibitions, and initiatives for packaging and branding.
This marks a considerable shift from piecemeal sector-specific export support schemes like the Status Holder Incentive Scheme. By consolidating credit, logistics, compliance, and advocacy under one umbrella, EPM purports to address structural inefficiencies that have restrained India's export sector—which stood at $770 billion in FY 2023-24 but remains far short of its full potential.
The Case For EPM: Addressing Systemic Gaps
First, this is a direct response to global trade dynamics. Exporters in sectors like engineering goods and marine products—India’s two largest contributors by value—have been disproportionately hit by rising tariff walls, particularly in the EU and North America. The provision under Niryat Protsahan for collateral-free credit seeks to resolve a pressing issue: MSMEs account for nearly 40% of India’s exports, yet the Reserve Bank of India’s March 2023 report found that 65% of MSMEs struggle to secure formal credit channels due to lack of collateral.
Second, EPM explicitly focuses on reducing logistics costs, an area where India lags. The Ministry of Commerce cites that Indian exporters pay an average logistics cost constituting 13-14% of gross sales, compared to only 7-8% in China. The focus on supply chain efficiencies, trade documentation simplification, and international market-branding assistance could prove consequential.
Third, the scheme ensures sectoral engagement. With Commodity Boards and Export Promotion Councils provided increased administrative and fiscal bandwidth, EPM positions itself as a participatory model, countering past criticism that India's export regime ignored sector-specific feedback loops. This institutional design appears promising.
The Case Against EPM: Institutional Challenges Cast Shadows
This optimism falters when one asks: How well-prepared are India's institutions to implement a mission-mode scheme, given historical precedent? Consider this: The DGFT, entrusted with frontline execution, is grappling with severe manpower shortages—a fact underscored by the Parliamentary Standing Committee on Commerce's 2024 report. Can it realistically add "digital integration" and "compliance audits" to its plate while managing policy licenses across regions?
More troubling is the reliance on credit guarantees for MSMEs without robust monitoring mechanisms. The CGSE's promise of ₹20,000 crore in collateral-free loans risks replicating the pitfalls of earlier schemes such as Emergency Credit Line Guarantee Scheme (ECLGS), which saw high default rates among unstructured MSMEs. Absent tighter performance benchmarks or risk-adjusted parameters, this could devolve into fiscal inefficiency.
Finally, the design defers critical ownership questions. While federal coordination across states and ministries is theoretically strong under EPM, the reality is fragmented capacities—trade facilitation around ports remains skewed towards Gujarat and Maharashtra, leaving inland exporters from Uttar Pradesh and Bihar at a disadvantage. If regional inequality endures, EPM risks widening existing fault lines.
What Other Democracies Did: South Korea's Export Development Experience
India is not the first country to grapple with sectoral export challenges. South Korea’s Export-Import Bank (KEXIM), during the 1977 industrial upswing, pioneered sector-specific credit guarantees while explicitly linking fiscal incentives with quantifiable production benchmarks. It coupled financial schemes with aggressive global branding, resulting in a 19% annual growth in electronics exports between 1977 and 1982. However, South Korea avoided weakening project accountability by retaining oversight within highly autonomous agencies rather than generalized policy boards.
India’s structural choice to rely on DGFT and commodity boards stands in stark contrast, risking bureaucratic delays similar to older programmes like Trade Infrastructure for Export Scheme (TIES), which saw 62% of sanctioned projects delayed by over 2 years.
Where Things Stand: Balancing Optimism with Prudence
EPM undoubtedly aligns with India's wider ambition to move from $770 billion in annual trade in FY 2023-24 to a targeted $1.2 trillion by FY 2030-31. Yet skepticism lingers. The timeline for sectoral support is ambitious, compounded by capacity gaps at implementing agencies. The jury is out on whether tighter credit coverage will prove effective or merely funnel strained liquidity into high-risk territories. EPM’s structural limitations, particularly regarding logistical and compliance inequalities across states, remain unresolved.
Still, dismissing EPM outright would be premature. Its emphasis on resolving non-tariff barriers (NTBs), combined with direct credit assurance in trade-intensive sectors, signals a strategic pivot for India’s export economy. Execution, however, will determine its success—not intent.
Prelims Practice Questions
Practice Questions for UPSC
Prelims Practice Questions
- Statement 1: EPM includes two sub-schemes focusing solely on financial assistance.
- Statement 2: EPM aims to enhance India's competitiveness in global exports.
- Statement 3: The programme brings together multiple agencies to streamline export processes.
Which of the above statements is/are correct?
- Statement 1: It offers loans only to large corporations without involving MSMEs.
- Statement 2: There is a risk of high default rates due to lack of robust monitoring.
- Statement 3: All states have equal capacity for trade facilitation under the new scheme.
Which of the above statements is/are correct?
Frequently Asked Questions
What are the two sub-schemes underpinning the Export Promotion Mission (EPM) and what are their primary objectives?
The two sub-schemes are Niryat Protsahan and Niryat Disha. Niryat Protsahan focuses on providing financial support, such as collateral-free credit to exporters, while Niryat Disha emphasizes non-financial facilitation, including compliance assistance and funding for international exhibitions.
How does the Export Promotion Mission (EPM) aim to improve India's export logistics?
EPM aims to reduce logistics costs, which currently account for 13-14% of Indian exporters' gross sales, by improving supply chain efficiencies and simplifying trade documentation. This is crucial because India lags behind other countries like China, where logistics costs are lower.
What are the historical challenges that may affect the successful implementation of the Export Promotion Mission (EPM)?
One significant challenge is the manpower shortage within the Directorate General of Foreign Trade (DGFT), the nodal agency for EPM. This could hinder the effective execution of its mandates, including digital integration and compliance audits, especially while managing existing policy licenses.
What is the significance of the collateral-free credit provided under the Niryat Protsahan scheme?
The collateral-free credit under Niryat Protsahan is essential as a significant proportion of Micro, Small, and Medium Enterprises (MSMEs) struggle with accessing formal credit. By providing ₹20,000 crore in collateral-free loans, it aims to ease the financial constraints that inhibit export potential.
In what way does EPM seek to address the issues of regional inequality within India's export sector?
EPM intends to mitigate regional disparities by increasing the administrative and fiscal bandwidth of Commodity Boards and Export Promotion Councils. However, the challenge remains as some states, like Gujarat and Maharashtra, dominate trade facilitation, potentially leaving inland areas like Uttar Pradesh and Bihar disadvantaged.
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