India plans global trade promotion body for MSME exports, to be announced in budget

  • The move comes on the backdrop of India's rising trade deficit and the urgent need to boost exports.

Rituraj Baruah, Dhirendra Kumar
Published23 Jun 2024, 05:04 PM IST
The GTPO is aimed to help small businesses with registration, licensing, and certification required for exports of goods and services. (Photo: Bloomberg)
The GTPO is aimed to help small businesses with registration, licensing, and certification required for exports of goods and services. (Photo: Bloomberg)

New Delhi: The Centre may propose a global trade promotion body focused on boosting MSME exports in the upcoming Union budget, three people aware of the development said. The move comes on the backdrop of India's rising trade deficit and the urgent need to boost exports, the people said on condition of anonymity.

The new global trade promotion organization (GTPO) is being conceptualized on the lines of the Japan External Trade Organization (JETRO) and Australian Trade and Investment Commission (AUSTRADE), and will have branches in major economies. 

Focused towards MSMEs

“There has been a demand and also a consideration for a trade promotion body that would have offices abroad and work hands-on in terms of promoting exports for MSMEs who do not the economic muscle to promote their goods and establish a market abroad on their own,” said one of the people cited above.

Another person said that although there are sector-specific trade promotion bodies in the country along with the India Trade Promotion Organisation (ITPO), they do not have a robust presence globally and mostly work out of India.

Read | Centre announces infrastructure projects, farmer support as part of 100 day programme

The GTPO is aimed to help small businesses with registration, licensing, and certification required for exports of goods and services to different developed and developing economies, and creating business opportunities for them in coordination with India's consulates abroad.

“It will work like a one-stop solution for MSME firms. The commerce ministry is hoping that it will play a key role in reducing trade deficit by encouraging MSME exports,” the third person said, adding that it would also help smaller business participate in global exhibitions, trade shows and buyer-seller meets.

Queries sent to the ministries of commerce, MSME and finance remained unanswered till press time.

Budget 2024: Fiscal assistance tops states’ wish list

“Such a trade promotion body with its branches in other countries is key for the country's MSMEs,” Vinod Kumar, president of India SME Forum said. "It would be apt if such a body is given a target to increase India's exports to $1 trillion." 

India's merchandise exports in the just-concluded financial year (FY24) fell by 3.11% to $437.06 billion as against $451.07 billion in FY23, as per commerce ministry data.

The trade situation

The country's merchandise trade deficit widened to a seven-month high in May, but largely due to a surge in imports. The deficit stood at $23.78 billion in May, up 5.5% year-on-year and up 24.5% from April. 

Merchandise exports increased to $38.13 billion in May, up from $34.95 billion in May 2023 and $34.99 billion in April. 

Imports, however, saw a sharper rise, reaching $61.91 billion in May, up from $57.48 billion in May 2023 and $54.09 billion in the previous month.

Why MSMEs are important

MSMEs are a key constituent of the Indian exports ecosystem, contributing about 45% to the country's total exports, according to a Global Trade Research Initiative (GTRI) report. They also account for around 38% of India's manufacturing output.

MSMEs also contribute about 27% to India's GDP and employ more than 110 million people, making it the largest employer after agriculture (about 148 million employed, according to GTRI).

A NITI Aayog report on MSME exports released in March this year said: "Exports represent an enormous and under-utilized opportunity for the MSME sector. Sectors where Indian MSMEs can participate and compete in export markets include handicrafts, handloom textiles, ayurveda and herbal supplements, leather goods, imitation jewellery and wooden products. Globally, these sectors constitute substantial markets exceeding $340 billion, whereas their domestic market is considerably smaller."

Read | Centre likely to increase interest-free loans to states

Noting that over time, small firms have encountered difficulties in tapping into export markets due to the inherent obstacles posed by economies of scale, the report said that it's more challenging for small enterprises to enter foreign markets, adhere to compliance requirements, achieve cost-effective production, and efficiently manage logistics for clients.

“Exporting is crucial for Indian MSMEs to break away from dwarfism and unlock their true growth potential. Exporting can allow 54 lakh (5.4 million) manufacturing MSMEs to tap into new markets and expand their customer base, leading to increased revenue and profit,” it said.

 

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
First Published:23 Jun 2024, 05:04 PM IST
HomeEconomyIndia plans global trade promotion body for MSME exports, to be announced in budget

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel

    157.75
    03:43 PM | 19 JUL 2024
    -8.6 (-5.17%)

    Tata Power

    414.15
    03:59 PM | 19 JUL 2024
    -15.85 (-3.69%)

    Bharat Electronics

    306.30
    03:45 PM | 19 JUL 2024
    -7.2 (-2.3%)

    Zee Entertainment Enterprises

    137.55
    03:57 PM | 19 JUL 2024
    -4.9 (-3.44%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Tata Teleservices Maharashtra

    102.11
    03:59 PM | 19 JUL 2024
    4.68 (4.8%)

    Rail Vikas Nigam

    614.00
    03:59 PM | 19 JUL 2024
    27.65 (4.72%)

    Jubilant Pharmova

    752.25
    03:43 PM | 19 JUL 2024
    25.3 (3.48%)

    One 97 Communications

    458.70
    03:55 PM | 19 JUL 2024
    13.65 (3.07%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      75,217.00292.00
      Chennai
      75,657.001,099.00
      Delhi
      74,485.00-659.00
      Kolkata
      74,485.00-73.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.86/L0.00
      Chennai
      100.75/L0.00
      Kolkata
      104.95/L0.00
      New Delhi
      94.72/L0.00
      Calculate Tax
      HomeMarketsPremiumInstant LoanBudget