Emergency Credit Scheme Offers Limited Relief to Micro and Small MSMEs: Kapil Sadh, Exporter

Greater Noida News (13/05/2026): The Government’s recently introduced “Emergency Credit Scheme” for MSMEs is being promoted as a significant support measure for small businesses, but industry voices from the ground suggest that its actual benefits for micro and small enterprises may remain highly restricted.

Raising concerns over the scheme’s effectiveness, Kapil Sadh said that while the initiative appears positive in principle, it fails to address the real financial challenges currently confronting small manufacturers and exporters across the country.

According to him, a large section of micro and small MSMEs are already struggling under mounting operational pressures, including rising production costs, expensive electricity tariffs, elevated interest rates, delayed payment recoveries, shrinking export margins and growing international competition. In such an environment, businesses require immediate liquidity support and financial stability rather than additional debt obligations.

He pointed out that the current framework of the Emergency Credit Scheme primarily revolves around fresh lending, whereas many smaller enterprises are already burdened with existing working capital loans and financial liabilities. As a result, taking on more debt often becomes a financial risk instead of a practical solution for survival.

Kapil Sadh further observed that banks continue to follow strict lending norms involving CIBIL scores, collateral requirements, financial performance indicators and previous borrowing records before approving any additional credit facilities. Due to these conditions, the MSMEs facing the most severe financial stress frequently fail to qualify for the scheme itself.

He stated that larger and financially stable companies generally succeed in securing additional funding, while smaller units with weak cash flows remain excluded from meaningful support. In many cases, fresh borrowing only increases repayment pressure without resolving the underlying liquidity crisis.

The exporter also highlighted concerns regarding delayed implementation of previously announced export support measures. Referring to the Government’s “Export Promotion Mission” announced on 1 February 2025 and the DGFT circular issued on 2 January 2026, he said that exporters are still awaiting the Interest Equalization Scheme subvention for April 2026, which was expected to be automatically credited by 30 April 2026.

He emphasized that for export-oriented MSMEs, interest equalization is not merely an incentive but a crucial mechanism that directly impacts global competitiveness. Delays in such reimbursements adversely affect working capital cycles, export pricing strategies and the ability of Indian exporters to compete effectively in international markets.

Kapil Sadh stressed that if the Government genuinely intends to strengthen the MSME sector, policy measures must extend beyond credit-based announcements. He called for timely release of interest subvention benefits, affordable working capital financing, lower borrowing costs, quicker refund processing, relief in power tariffs and a more practical and flexible banking approach for small businesses.

He concluded by stating that micro and small MSMEs currently need confidence-building measures, stronger liquidity support and effective implementation of policies at the ground level, rather than additional loans that remain difficult to access and even harder to repay.

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