Export Promotion Mission 2025: Policy Update & Strategic Implementation

Policy Update
Yash Kumar

Background

India’s export promotion mission was announced in the 2025-26 Union Budget presented by the finance minister with a budget allocation of Rs 2,250 crore. This mission is a major step for India to make its global trade more competitive.

Currently, worldwide, there has been a sharp increase in protectionist policies; this initiative aims to provide support to Indian exporters, especially Micro, Small and Medium Enterprises (MSMEs). The Mission is going to focus on providing assistance on challenges that are faced by exporters, such as, it will provide easier access to credit, international factoring (a financing method in international trade), and assisting businesses in dealing with non-tariff barriers in foreign markets. The initiative has been introduced at a crucial time when many exporters are struggling with complex trade regulations and climate-related trade policies which are implemented by major economies.

India’s export promotion mission is a joint initiative of the Ministry of Commerce, Mirco, Small and Medium Enterprises (MSMEs) and Finance. The ministries will set specific export targets for each sector and will take necessary steps for the same. Thus, helping India boost its presence in global markets.

The initiative is being introduced during the growth of India’s export sector, which is growing while global economic uncertainties remain prevalent. During the first nine months of the 2024-25 financial year, India’s goods export reached $321.37 Billion, highlighting a 1.6% increase compared to the previous year during the same period. When including the service sector, the export growth remained at a steady 6%, totalling $602.64 Billion. These data reflect the stability of India’s export sector, although they were not able to reach the government’s ambitious target of $800 billion for goods and services for the financial year.

MSMEs have also been an important part of India’s exports, contributing approximately 45.56% to national exports. MSMEs’ significance is particularly in sectors such as readymade garments, leather goods, processed foods and engineering items, where they have shown remarkable competitiveness. Also, MSMEs account for 100% of the sector’s exports in some niche categories like sports goods. Due to their potential, the government has always prioritised export promotion from the small-scale industry by simplifying the procedures, production incentives, preferential treatment in market development funds and streamlining duty drawback rules.

Functioning

This initiative operates within India’s broader export facilitation system, which was built upon the foundation established by the Foreign Trade Policy 2023. Foreign  Trade Policy 2023 has four key pillars: Incentive to remission, Export promotion through collaboration, Ease of doing business and Emerging areas. This framework provides the structure within which the Export Promotion Mission functions.

The mission’s approach highlights the collaborative governance model where the responsibility for the implementation is shared between the Ministry of Commerce, the Ministry of MSME, and the Ministry of Finance. This inter-ministerial structure reflects the cross-cutting nature of export challenges and aims to create a well-organized and coordinated approach to export promotion. This approach is seen in other countries where export promotion governance has now become integrated between agencies that are responsible for trade, industry development and finance.

Export Promotion Initiatives typically work with multiple intervention channels. These channels include providing financial assistance through export credit and guarantees, providing technical support in dealing with non-tariff barriers, organising international trade events, and matching business between domestic and international partners. These initiatives also help strengthen a company’s resources and export abilities, which are essential for creating effective export strategies. 

They employ various mechanisms to implement their strategic objectives. One key mechanism is providing information related to exports, which includes market intelligence, regulatory requirements and business opportunities in foreign markets. Education and training are also very important mechanisms in export marketing, product development, and export management, and they aim to enhance human capital and organisational capabilities within firms. Financial assistance is the third mechanism, which includes export credit, credit guarantees, and other instruments which are made to address the capital constraints and risk mitigation needs of exporters.

Evaluation

The evaluation of the initiative might require an effective framework that includes multiple dimensions of performance assessment, incorporating output and outcome metrics with increasing emphasis on impact evaluation to determine the causal effects of interventions.

Output measures for the initiative might include the number of loans provided, beneficiaries served, technical assistance provided, and trade promotion events organised. These metrics highlight the immediate outcomes of the initiative but do not explain its effectiveness. Outcome measures would explain the significant outcomes of the initiative, such as the number and value of exports generated by the program, achievements of market diversification and survival rates in export markets.

The NITI Aayog’s Export Preparedness Index (EPI) can be used as a valuable tool for contextualizing and evaluating the mission’s impact at both regional and state levels. The index analyses the export at both state and district levels, which provides a detailed evaluation of export capabilities and performance that could provide us with the intervention needed under the mission.

The evaluation framework must also assess the effectiveness of the mission’s objectives—whether it reaches the intended beneficiaries, particularly those MSMEs that have export potential but are facing specific constraints.

Performance

Scheme2024-25 (RE)2025-26 (BE)Change (%)
Total Export Promotion SchemesRs 2,718.73 CroreRs 2,250 Crore-17%
Market Access Initiative (MAI)AllocatedNil-100%
Interest Equalization SchemeAllocatedNil-100%
Duty Drawback SchemeRs 258.2 CroreRs 181.9 Crore-29.5%
Department of Commerce (Overall)Rs 5,624 CroreRs 5,300.99 Crore-5.7%

Source: Union Budget 2024-25 and 2025-26, RE (Revised Estimates), BE (Budget Estimates)

In the budget of 2025-26, there is a reduction of 17% in the overall allocation for export promotion schemes in comparison to the revised estimates for 2024-25; this reduction suggests a policy shift. The funding for the Market Access Initiative (MAI) and Interest Equalization scheme has been discontinued; this is particularly significant, as these have been replaced by the new Export Promotion Mission with a combined budget of Rs 2,250. The Market Access Initiative aims to provide support to businesses in expanding globally by improving access to markets through financial aid and trade agreements. Whereas the Duty Drawback Scheme, which aims to reduce taxes placed on the manufacturing cost of exported products, has also been reduced by nearly 30%.

Export Performance 2024-25:

India’s export performance during 2024-25 had moderate growth. During April-December 2024-25, merchandise exports grew by 1.6% year-on-year to $321.71 billion, imports rose by 5.15% to $532.48 billion during the same period, the trade deficit increased to $210.77 billion from $189.74 billion during the same period, In December 2024, exports for a second consecutive month by approximately 1% year-on-year to $38.01 billion.

The government is currently framing schemes under the Export Promotion Mission to provide easy credit, enhance factoring services, and assist exporters in dealing with non-tariff measures, particularly for MSMEs. These schemes are expected to be rolled out in approximately 4-5 Months from February 2025.

Impact

Given the fact that the initiative was announced last month on February 1, 2025, and is currently in the inter-ministerial consultation phase as of March 12, 2025, this section will primarily focus on the expected impact and potential outcomes rather than observed results as this initiative is a multifaceted approach which targets several dimensions of the export system, with system-wide implications that extend beyond immediate export performance metrics.

Projected Impact on Export Financing and Credit Access:

A central expected impact of the Export Promotion Mission is to increase export credit accessibility, particularly for Micro, Small, and Medium Enterprises (MSMEs). This might directly address the critical gap in the current export financing, where only $124.7 billion in export credit is given against the total requirement of $283 billion for exports valued at $437 billion in 2023-24.

Currently, high collateral requirements prevent many small and medium-sized exporters from participating in international markets. Still, the initiative aims to reduce the barriers so that it might reduce the high collateral requirements through capped support systems. If successful, the impact could be significant given the official projections that achieving the targeted $1 trillion in exports by 2030 would require approximately $650 billion in export credit.

The mission places special emphasis on increasing the export capabilities of MSMEs, which contribute approximately 45.56%  in 2023-24 to India’s national exports, according to the Ministry of Micro, Small & Medium Enterprises. The targeted interventions for MSMEs could have several impacts, such as a reduction in collateral requirements, and the participation of MSMEs will increase in the export market. Also, by providing them with financial assistance, the ability of small manufacturers will increase to meet international standards and certification with dedicated support. Thus, leading to the potential expansion of India’s exporter base, which will create more diverse and robust export ecosystems.

These outcomes would align with the initiative’s objective of supporting MSMEs that are facing international trade challenges, particularly in the light of climate change-related non-tariff measures like the European Union’s Carbon Border Adjustment Mechanism (CBAM) and the European Union Deforestation Regulation (EUDR).

Emerging Issues

The implementation of the  Export Promotion Mission faces several challenges that can affect its effectiveness and functioning; a fundamental challenge is policy consistency, which ensures that the initiative’s objective is not undermined by contradictory policies in other domains.

Institutional coordination is another significant challenge, given the collaborative nature of the initiative. Achieving an effective collaboration between the Ministry of Commerce, MSME, and Finance requires hard work because, this means overcoming rigid bureaucracy, corruption and different organisational priorities. The formation of appropriate performance measures and the existing evaluation framework do not completely address whether the initiatives meet their goals of effectively serving their beneficiaries. So, developing a more comprehensive measure that addresses the initiative’s immediate and long-term impact on exports remains difficult.

The effectiveness of the Export Promotion Mission must deal with various barriers that might potentially limit its effectiveness. These barriers include both internal obstacles faced by any firms and external constraints due to policies and market situations. Internal barriers may include limited market knowledge, inability to identify opportunities, production constraints and financial limitations. External barriers may include complex procedures, regulatory requirements in the given market and currency fluctuations.

Way Forward

The implementation of the Export Promotion Mission has a phased approach. The schemes under the initiative are currently being formulated by the government. This suggests that exporters can expect the first set of operational interventions by mid-2025; the mission’s forward strategy is its sector-specific approach rather than forming broad schemes; the government plans to set export targets for specific sectors while these targets will be monitored by the involved ministries.

This targeted approach acknowledges the diverse nature of India’s exports and the various challenges that are faced by different sectors in international markets. Industrial minister Piyush Goyal mentioned that the Export promotion mission will boost domestic manufacturing and industry exports, such as textiles, marine products, toys, and leather. Additionally, there is a plan for the government to establish facilitation groups where senior officers and industry representatives are selected for specific products and supply chains. These groups most likely serve as central subjects for addressing sector-specific issues and developing specific interventions to enhance their competitiveness.

The Export Promotion Mission EMission is closely related to the digital transformation of India’s trade ecosystem. The announcement of ‘Bharat TradeNet’ (BTN) as a unified platform for trading documentation and financing solutions acts as a complementary initiative with the Export Promotion Mission. This digital infrastructure will align with international practices and will complement the existing Unified Logistics Interface Platform, which will create a smooth trading environment for exporters.

Increasing access to export credit is the central pillar of this initiative. The initiative aims to facilitate easier credit access for exporters, with particular emphasis on financially constrained MSMEs, while specific mechanisms are still being formulated. Potential approaches may include streamlining credit processes, creating more favourable conditions for exporters, etc. The government has also revised the classification criteria for MSMEs to around 2.5 times the investment and two times turnover while retaining MSME status, while also providing credit benefits from Rs 5 crore to Rs 10 crore.

One of the main objectives of the mission is to provide assistance to exporters in dealing with non-tariff barriers in international markets. Beyond addressing specific barriers, the mission aims to facilitate India’s integration with global supply chains.

References

About the Contributor: Yash Kumar is a research intern at IMPRI, pursuing his bachelor of arts (Hons) in economics and sociology with a minor in political science from Christ University.

Acknowledgement: The author would like to thank his fellow intern Mr. Soorya and Ms. Aasthaba Jadeja for  reviewing my article.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

Read more at IMPRI:

PM-SVANidhi 2020: Empowering Street Vendors for a Stronger Economy

Grameen Credit Score: A step towards digitizing the rural people

Authors

Related Posts

Talk to Us