Guidelines for Support for Alternative Trade Instruments under Export Promotion Mission · Trade Notice No. 25/2025-26

Government of India Ministry of Commerce & Industry Department of Commerce Directorate General of Foreign Trade Vanijya Bhawan, New Delhi

Trade Notice No. 25/2025-26 Dated: 20th February 2026

Subject: Launch of Support for Alternative Trade Instruments under Export Promotion Mission (EPM) – NIRYAT PROTSAHAN – reg.

The Support for Alternative Trade Instruments intervention under Export Promotion Mission (EPM) – NIRYAT PROTSAHAN is hereby implemented prospectively with immediate effect.

2. The intervention seeks to strengthen access to export finance for MSMEs (involved in international value chains) through structured support for alternative trade finance mechanisms, to supplement bank-based export credit, with an initial focus on export factoring.

3. Export factoring arrangements, including both recourse and non-recourse factoring, and denominated in Indian Rupees or freely convertible foreign currencies, entered between eligible MSMEs (involved in international value chains) and Reserve Bank of India (RBI) or International Financial Services Centres Authority (IFSCA) regulated entities shall be supported.

4. The detailed Policy framework is enclosed as Annexure-I. The Operational and Procedural Guidelines is enclosed at Annexure-II. The governance Structure is enclosed at Annexure-III

5. The intervention shall be operationalised on a pilot basis for feedback, institutional learning, and data-driven refinements. The procedure for availing the given support is enclosed at Annexure-IV

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6. The guidelines are further submitted for stakeholder feedback in accordance with Paragraph 1.07A of the Foreign Trade Policy (FTP) 2023. Stakeholders may submit comments and suggestions on the Guidelines within 30 days from the date of issuance of this Trade Notice, through email at epm-dgft@gov.in

This is issued with the approval of the Competent Authority.

B KRUTI Digitally signed by B KRUTI Date: 2026.02.20 16:14:05 +05'30'

B Kruti Deputy Director General of Foreign Trade

(Issued from F. No. 01/02/34/AM-26/EPM)

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ANNEXURE-I to the TRADE NOTICE

POLICY FRAMEWORK FOR SUPPORT FOR ALTERNATIVE TRADE INSTRUMENTS

1 Objective a. The objective is to facilitate improved access to alternative trade finance instruments for MSMEs (as defined by the Ministry of MSME). b. The initiative seeks to provide a transparent, rules-based support mechanism for eligible alternative trade instruments—currently limited to export factoring.

2 Scope and Coverage a. Support under this Intervention shall be available in the form of interest subvention or equivalent cost support on the export factoring interest cost element, in respect of eligible export factoring transactions. b. Assistance shall be available only for export-related transactions undertaken through eligible factoring entities or financial institutions, in accordance with applicable financial and regulatory guidelines. c. The support shall be available exclusively to eligible MSMEs (involved in international value chains) and shall be subject to such ceilings, conditions, and safeguards as may be notified. d. The detailed operational framework—including eligibility conditions, application and claim procedures, reporting and monitoring requirements, and verification mechanisms—are prescribed under Annexure-II enclosed.

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ANNEXURE-II to the TRADE NOTICE

OPERATIONAL AND PROCEDURAL GUIDELINES FOR SUPPORT FOR ALTERNATIVE TRADE INSTRUMENTS

1 Eligibility, Scope and Coverage a. All MSMEs (involved in international value chains) with a valid active Importer-Exporter Code (IEC) (not in the Denied Entity List (DEL)) and a valid MSME Udyam Registration Number shall be eligible to receive subvention on the export factoring interest cost element. b. Only export factoring extended by entities recognised by Reserve Bank of India (RBI)/International Financial Services Centres Authority (IFSCA) shall qualify for support under this intervention. c. Interest subvention support shall be available only in respect of factoring availed for exports under a notified positive list of tariff lines defined at Harmonised System of Nomenclature (HSN) six-digit level and enclosed at Annexure-V. d. The positive list of tariff lines shall be reviewed periodically based on objective parameters such as sectoral MSME participation, export concentration ratios, labour intensity, and other relevant considerations, and shall not be linked to any export performance or minimum export threshold. e. The applicant shall be responsible for ensuring that the subvention is claimed and utilised strictly against export finance corresponding to the eligible tariff lines only. Any misutilisation or incorrect claim shall render the exporter liable for recovery and other action as per applicable rules.

2. Alternative Trade Instrument Supported Export factoring arrangements, on a recourse or non-recourse basis and denominated in Indian rupees or freely convertible foreign currency(s), entered into by eligible MSMEs (involved in international value chains) with Authorised Dealer banks, factoring companies, or other entities duly authorised or regulated by the RBI or the IFSCA, shall

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be eligible for interest subvention support on the applicable discount rate, subject to the other terms and conditions notified.

3. Implementing Framework a. Export factoring shall continue to be sanctioned by eligible entities in accordance with their own due diligence procedures. b. The subvention shall be provided at the applicable rate on export factoring interest cost element. c. Upon receipt of claims, the subvention amount shall be disbursed to the exporters’ bank account linked to their IEC. d. Any amendments, operational instructions, or clarifications relating to the obligations of eligible entities shall be issued through circulars or notifications as may be required.

4. Nature and Extent of Assistance a. Subvention rate shall be notified separately, after appropriate benchmarking with prevailing risk-free or other reference rates in comparable economies. b. The notified subvention rate shall be reviewed on a bi-annual basis and revised, where necessary, preferably in the last week of March and September of each financial year. c. An annual ceiling shall apply to the total subvention amount that an MSMEs involved in international value chains may receive in a given financial year. The annual ceiling shall be notified separately and reviewed preferably in the last week of March. d. Given Support shall not be admissible in respect of deemed exports, as defined under Chapter 7 of the Foreign Trade Policy or for exports to Special Economic Zones (SEZ). e. Revised interest subvention rates, as notified from time to time, shall be applicable only to export factoring on or after the date of such notification. f. Where an exporter avails export factoring from more than one eligible institution, the responsibility for ensuring that the aggregate subvention availed remains within the prescribed annual ceiling shall rest with the exporter. Any excess claims above the admissible limit shall be liable to recovery and commensurate action. g. Entities graduating out of their existing MSME category during the financial year, due to an upward change in investment or turnover, shall continue to remain eligible for interest subvention support for a period of three years from the date of such re-

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classification, in accordance with Ministry of MSME Notification S.O. 4926(E) dated 18.10.2022, and subject to fulfilment of all other prescribed conditions. h. For FY 2025-26, the annual ceiling on support shall apply in full and shall not be subject to pro-rata adjustment, irrespective of the date of sanction during this financial year. i. Given Support shall be admissible only in respect of export factoring arrangements on or after 20th February 2026 j. The procedure to claim assistance under the Intervention is in the guidelines at Annexure-IV

5. Level of Assistance a. Rate of Subvention: The subvention rate shall be at 2.75%, as notified under this Intervention. The subvention rate will be reviewed and notified on a bi-annual basis, benchmarking it against prevailing global factoring costs. b. Cap on total adjustment amount: The annual total subvention amount shall be capped at ₹50 Lakh per MSME in a given financial year.