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Indian Export Promotion Mission: Credit Guarantees and New Financing Pathways for MSMEs
India has launched a $3 billion Export Promotion Mission to help MSMEs reach $2 trillion in exports by 2030. But state guarantees alone cannot close the trade finance gap — digital RWA platforms and tokenization in GIFT City are emerging as the fast lane to working capital.
The Indian government has set an ambitious goal — to bring exports to $2 trillion by 2030. In November 2025, the Cabinet approved the corresponding Export Promotion Mission (EPM) plan.
The main emphasis is on micro, small, and medium enterprises (MSMEs). Already today, according to The Economic Times, they account for 45-48% of all Indian exports.
However, the main brake on MSMEs is a chronic shortage of working capital. At the same time, banks are reluctant to provide unsecured financing against export contracts.
The problem has a global scale: the global trade finance gap is estimated at $2.5 trillion. Indian exporters feel this deficit especially acutely. According to the Federation of Indian Export Organisations (FIEO), from February 2025 to February 2026, the volume of export credits declined by almost 14%, even though exports themselves grew by 4%.
This trend is compounded by a number of other difficulties for exporters:
in international trade, payment for supplies arrives with a delay of up to 90-120 days;
logistics routes have lengthened due to complex geopolitical conditions.
In response to these challenges, the Indian government relaunched the export guarantee system under the Export Promotion Mission program.
How the Export Promotion Mission and the guarantee mechanism work
The Indian government launched the state program Export Promotion Mission (EPM) on December 6, 2025. Approximately $3 billion has been allocated for it. It will operate until 2031 and includes 2 pillars.
Niryat Protsahan (financial instruments):
Loan subsidies — the state compensates the exporter for part of the interest on loans taken before and after shipment of goods, reducing the cost of borrowed money.
Support for factoring and forfaiting — assistance in selling receivables from buyers to a third party so that they can receive money immediately without waiting for payment from the counterparty.
Credit guarantees — the state acts as a guarantor before the bank, replacing physical collateral (real estate, equipment), which MSMEs often do not have.
Loans for e-commerce companies engaged in foreign trade. These are special credit products for companies that sell goods through international online platforms.
2. Niryat Disha (non-financial instruments):
Compliance with quality standards (TRACE) — assistance in certifying products according to international standards so that they meet the requirements of foreign markets. This makes it easier for a company to enter them.
Logistics and warehousing (FLOW) — support in organizing supply chains and creating warehouses abroad.
Transport subsidies (LIFT) — compensation for part of transport costs for export deliveries.
Trade analytics and training (INSIGHT) — provision of market information and transfer of export competencies.
The introduction of these measures has significantly simplified the work of exporters.
The state guarantee works as insurance for the bank. The state compensates it for losses if a foreign buyer does not pay for the goods. As a result, the bank is ready to issue money to MSMEs without collateral, because the risks are assumed by the state corporation ECGC.
It was created in 1957 to support exporters and today covers up to 80-90% of losses on unpaid export contracts, and under special programs — up to 100%.
For example, in 2026, due to the crisis in the Persian Gulf region, the government launched the RELIEF program with a budget of $60 million. Under it, ECGC covers up to 100% of losses for already insured exporters and up to 95% for new clients.
Secondly, the state company NCGTC provides a 100% guarantee on credit lines without collateral. MSMEs that do not have real estate or equipment can still obtain a loan.
This is critically important for small business. It cannot afford to pledge real estate or equipment, since its capital is frozen in goods and receivables. ECGC guarantees and insurance remove this barrier. The bank receives protection against buyer default, and the exporter receives access to working capital.
Without this scheme, export financing for MSMEs would be almost unavailable.
TradFi barriers: why state guarantees do not solve all problems
It is premature to say that the problem has been solved. Although India has launched large-scale support programs, it is still difficult for small businesses to obtain money.
Approval takes weeks and months. Banks check counterparties, study documents, and coordinate terms. Exporters complain that they spend enormous money on complying with all bank requirements, undergo complex checks, and the result is still not guaranteed.
Banks hedge even with a state guarantee. They require partial security or do not work at all with certain countries that they consider risky. For example, after the escalation of the conflict in the Strait of Hormuz area, insurance premiums for vessels traveling along this route increased by 90-100%. For a large company this is an inconvenience, but for an MSME with small working capital it is a catastrophe.
Cash gaps remain the main problem. In international trade, a deferred payment of 90-120 days after shipment is the norm. But if a company has limited working capital, a payment delay of even 30 days may prevent it from purchasing raw materials for the next order.
As a result, small business remains without money, even when contracts exist and buyers are reliable.
Alternative liquidity and RWA: how technology bypasses banks
The way out of this situation is to change the rules of the game. Instead of standing in lines at banks, exporters today can obtain money through fintech platforms and special zones such as GIFT City in the Indian state of Gujarat.
GIFT City is India's first zone where tokenization of real assets is permitted. The regulator IFSCA (International Financial Services Centres Authority) operates there and has created rules for the issuance and trading of tokenized assets.
The Japanese bank MUFG already conducted its first fully digital transaction through its branch in GIFT City on February 25, 2025. Instead of two days to process a letter of credit, it took only three hours.
Another option is invoice tokenization, thanks to which an export invoice turns into a digital asset. The mechanism is as follows:
the exporter uploads the invoice to the platform, and it becomes a digital token;
investors from around the world see this asset and can provide money against its collateral within 24-48 hours.
ITFS platforms, which operate under the supervision of IFSCA, give exporters and importers access to a whole range of instruments from financiers around the world:
export factoring;
reverse factoring;
supply chain financing;
forfaiting.
The domestic Indian platform TReDS has already financed working capital for MSMEs in the amount of $85 billion, while the default rate was less than 1%. This means that the system works reliably, notes the Ministry of Finance of India.
| Criterion | Bank loan (even under a state guarantee) | Digital RWA platform |
|---|---|---|
| Time to obtain capital | Weeks–months | 24-48 hours |
| Requirement for hard collateral | Yes (partially replaced by a guarantee) | No (invoice as collateral) |
| Dependence on bank limits | Critical | Absent |
| Speed of cross-border transfer | Days (correspondent banks) | Minutes (blockchain/digital platforms) |
| Access for MSMEs | Limited (high percentage of rejections) | High |
Checklist: how an MSME exporter can close a cash gap
Use ECGC insurance as collateral. Instead of real estate or equipment, you can offer the bank a state guarantee.
Switch to non-recourse factoring instead of ordinary factoring. It fully transfers the risk of buyer non-payment to the factor, which removes the risk from your balance sheet.
Use smart escrow for settlements with new buyers. Smart contracts automatically block payment and unblock it only after all terms of the transaction are fulfilled. This is safe and eliminates the risk of fraud. Connect to digital platforms (RWA) for additional financing. Platforms in GIFT City and international investor networks provide access to money from around the world without tying you to local bank limits.
How Edenex solutions help businesses
India's state initiatives set the right vector. The Export Promotion Mission, NCGTC credit guarantees, and ECGC insurance — all of this creates a foundation on which MSMEs can build their export business.
But the reality is that the traditional banking system cannot keep up with market needs. While banks check documents and coordinate limits, a contract may go to a competitor, and the buyer may find another supplier.
Businesspeople are seeking alternative liquidity through technological solutions that provide high speed. For example, the Edenex platform combines the reliability of traditional financing with convenient asset digitization technologies.
Get quick access to working capital against your export contracts or invest in secured invoices with a transparent transaction protection architecture.
FAQ: frequently asked questions
What is the difference between pre-export and post-export financing?
In the first case, it is provided before shipment (pre-shipment). The money goes to purchasing raw materials, production, and packaging of goods. In the case of post-export financing (post-shipment), the exporter receives money when the goods have already been sent to the buyer, but payment has not yet arrived. Both types of loans are covered by subsidies and guarantees from India.
How does a state guarantee affect the cost of factoring?
The guarantee reduces the factor's risks, so it charges a lower commission. Under the EPM, a subsidy of 2.75% of the factoring commission is provided for MSMEs — this noticeably reduces the cost of raising money.
Can an Indian MSME receive money from foreign investors, bypassing local banks?
Yes. Through digital platforms in GIFT City, Indian exporters can attract capital from around the world. For example, the Japanese MUFG Bank has already conducted the first fully digital transaction through GIFT City, reducing the time from two days to three hours.
