India Launches New Export Factoring Support for MSMEs
Boosting Global Reach: India Launches New Export Factoring Support for MSMEs – Trade Notice No. 25/2025-26
For years, small and medium enterprises (MSMEs) have cited access to finance as one of the biggest hurdles in competing on the global stage. Traditional bank credit doesn’t always fit the fast-paced, high-volume nature of international trade.
Recognizing this, the government has officially launched a new intervention under the Export Promotion Mission (EPM) – NIRYAT PROTSAHAN. As of February 20, 2026, the “Support for Alternative Trade Instruments” is live, aiming to revolutionize how exporters fund their operations.
What is the New Initiative?
The core focus of this mission is to move beyond standard bank loans and introduce Export Factoring as a primary tool for liquidity.
In simple terms, export factoring allows you to sell your accounts receivable (your unpaid invoices) to a third party (a “factor”) at a discount. This provides your business with immediate cash flow instead of waiting 30, 60, or 90 days for an international buyer to pay.
Key Highlights of the Scheme
- Target Audience: Specifically designed for MSMEs integrated into international value chains.
- Flexibility in Financing: Support covers both recourse (where the exporter is liable if the buyer doesn’t pay) and non-recourse (where the factor takes the credit risk) factoring.
- Currency Options: Arrangements can be denominated in Indian Rupees (INR) or any freely convertible foreign currency.
- Regulated Security: Support is limited to transactions through entities regulated by the Reserve Bank of India (RBI) or the International Financial Services Centres Authority (IFSCA).
Why This Matters for Your Business
Traditional collateral-based lending can be restrictive. By pivoting toward alternative trade instruments, the EPM – NIRYAT PROTSAHAN mission offers:
- Improved Liquidity: Get paid immediately upon shipment.
- Risk Mitigation: Options for non-recourse factoring help protect your business from foreign buyer defaults.
- Growth Scalability: Use the immediate cash flow to take on larger orders without waiting for previous payment cycles to close.
A Pilot Phase Built on Feedback
The government is rolling this out as a pilot program. This means the system will be refined based on real-world data and, most importantly, your feedback.
According to the Foreign Trade Policy (FTP) 2023, the government is inviting stakeholders to share their thoughts. If you have suggestions or comments on the operational guidelines, you have 30 days (until March 22, 2026) to submit them via email to epm-dgft@gov.in.
Ready to dive into the details?
The full policy framework, procedural guidelines, and application steps are outlined in the official Annexures (I-IV) of Trade Notice No. 25/2025-26.
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