Apparel Export Promotion Council Urges RBI to Frame Separate Export Policy for MSMEs

Apparel Export Promotion Council (AEPC), the apex body of apparel exporters in India, has requested for a separate export policy for the Micro, Small, and Medium Enterprises (MSMEs) sector from the Reserve Bank of India.

A Sakthivel, chairman of AEPC met RBI Governor Sanjay Malhotra, Governor in Mumbai yesterday and proposed that a dedicated Special Interest Package Scheme should be introduced for MSMEs, a statement from AEPC said.

Currently, banks determine lending rates based on their internal policies and balance sheet considerations, leading to inconsistencies and higher borrowing costs.

“A large number of apparel exporters across India — predominantly MSMEs — face several operational and regulatory difficulties, particularly in their interactions with Authorised Dealer (AD) Banks, export finance systems, and compliance frameworks," the statement read. 

It also highlighted that the sector face challenges like high interest rates on MSME loans, increasing the cost of borrowing and affecting competitiveness; lending rates closely linked to CIBIL scores, which places small enterprises and first-time exporters at a disadvantage; high Turnaround Time (TAT) for processing and sanctioning MSME loans, impacting working capital cycles, limited digitalization of MSME lending processes, resulting in procedural delays and lack of transparency, etc.

To address these concerns, Sakthivel urged the RBI to issue regulatory guidelines ensuring fair, transparent and uniform lending practices for MSMEs. He also called for end-to-end digital loan processing systems with real-time tracking to improve credit access and support sustainable growth.

On export finance, he sought an increase in the Interest Equalisation Scheme from the existing 2.75% to 5% for manufacturing exporters. He further requested that the current ₹50 lakh cap be removed and replaced with a graded eligibility limit based on turnover or export performance.

The AEPC chief also proposed a series of structural reforms to ease the compliance burden on smaller exporters. These included making external credit ratings mandatory only for MSMEs with total banking exposure above ₹100 crore, replacing Credit Information Reports with CRILC reports for regulatory monitoring where applicable, and waiving or reducing processing charges on renewal of existing bank limits where there is no enhancement.

Describing the meeting as timely, Sakthivel said India’s expanding network of free trade agreements — now covering 37 countries — presents a significant opportunity for the apparel and textiles industry over the next decade. “It is time to leverage these advantages to boost exports,” he said.

MSMEs contribute nearly 30% to India’s GDP and around 45% to total exports, while employing more than 110mn people. Despite this persistent financial and structural bottlenecks continue to weigh on their export performance.