NITI AAYOG RELEASES REPORT BOOSTING EXPORTS FROM MSMES

1. In March 2024, the Niti Aayog released a report focusing on improving exports from Micro, Small, and Medium Enterprises (MSMEs) in India.
2. The report highlights the crucial role MSMEs play in the Indian economy, stressing their significant contributions to employment, exports, and overall economic growth.
3. Despite their importance, MSMEs face challenges when accessing export markets, including issues related to economies of scale, compliance requirements, production costs, and logistics management.

Revised Definition of Micro, Small and Medium Enterprises
Parameters	Micro	Small	Medium
Investment in Plant and Machinery	< 1 Crore INR	< l0 Crore lNR	< 50 Crore INR
Annual Turnover	< 5 Crore INR	< 50 Crore INR	< 250 Crore INR

Key highlights of the report

1. Introduction to MSMEs in Indian Economy:
   1. MSMEs are crucial to India's economic landscape, contributing significantly to employment, GDP, and exports.
   2. They employ over 11 crore people and account for around 27.0% of India's GDP.
2. MSME Sector Overview:
   1. India has approximately 6.4 crore MSMEs, with 1.5 crore registered on the Udyam portal.
   2. These enterprises employ around 23.0% of the Indian labor force, making them the second-largest employer after agriculture.
   3. They contribute 38.4% of the total manufacturing output and 45.03% of the country's total exports.
3. Export Potential of Indian MSMEs:
   1. Indian MSMEs have significant potential in export markets, particularly in sectors like handicrafts, textiles, ayurveda, leather goods, imitation jewelry, and wooden products.
   2. Despite a massive global market exceeding USD 340 billion, Indian MSMEs face challenges in tapping into export markets due to various obstacles.
4. Role of E-commerce in Facilitating Exports:
   1. E-commerce platforms offer opportunities for MSMEs to overcome traditional barriers to exports such as economies of scale, compliance requirements, production costs, and logistics management.
   2. The report suggests modifying the business environment to facilitate seamless exports through e-commerce platforms, coupled with addressing essential ease-of-doing-business factors.
5. Recommendations to Boost MSME Exports:

1. Creation of One-Stop Information Channel for Exporters: - Proposes the establishment of a comprehensive information portal using AI-based interface under the Ministry of Commerce to provide exporters with all necessary market-related information.
2. Creation of National Trade Network (NTN): - Advocates for the development of an end-to-end national trade portal to streamline the export process, reduce paperwork burden, and enhance efficiency for MSME exporters.
3. Promotion of E-commerce Exports: - Suggests measures to promote e-commerce exports, including distinction between Exporter on Record (EOR) and Seller on Record (SOR), reduction in invoice value without percentage ceiling, and exemption on import duties.
4. Promotion of Ease of Merchandise Exports: - Calls for extending Ease of Doing Business initiatives to export processes, offering relaxations and forgiveness on compliance requirements for MSMEs, and ensuring timely disbursement of incentives.
5. Improvement in Access to Export Finance: - Proposes promoting Export Credit Guarantee schemes to enhance working capital availability for MSMEs and creating a single marketplace for export credit providers.
6. Ensuring Accurate Measurement: - Recommends integrating DGFT trade data with GST and income tax data to establish reliable measurement of MSME exports and create a mechanism for sharing information across government departments.

6. Conclusion:
   1. Emphasizes the enormous potential of MSMEs in driving exports and proposes practical measures to reduce business costs and friction without additional fiscal burden.
   2. The report's methodology includes comprehensive research combining secondary research and stakeholder analysis to provide a holistic understanding of the subject.

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