Apex exporters body FIEO today suggested the government to extend fiscal benefits to Micro, Small and Medium Enterprises (MSMEs) to boost exports from the sector.

MSME sector contributes about 45 per cent to the country’s total exports.

“MSME exporters may be provided additional exports benefits. It would help in promoting exports,” Federation of Indian Export Organisations (FIEO) said in a statement.

In view of current downfall in exports, encouragement to MSME sector by way of fiscal incentives on their year-on-year export growth would motivate them for aggressive export marketing, which in turn could help in restoring export momentum, it added.

It also said that the biggest challenge affecting MSME exports is on the marketing front as most of the units lack financial resources to meet the cost.

Government needs to chip in with liberal funding. The total marketing support extended by (the Commerce Ministry) is insufficient to meet the demand of MSME for export marketing.

“Government may create an Export Development Fund ( EDF) in order to support them on this front. The corpus of the fund should be 0.5 per cent to 1 per cent of export value so that sizable money is available to promote MSME exports,” it said.

Exports dipped for 14th month in a row in January, down 13.6 per cent to $21 billion due to fall in shipments of petroleum and engineering goods, although trade deficit showed improvement.

Imports shrank 11 per cent to $28.71 billion last month, resulting in a trade deficit of $7.63 billion, lowest in eleven months.

In February last year, the deficit was $6.85 billion.

Source: The Economic Times