India’s target of USD 2 trillion in exports by 2030-31 will depend critically on the ability of its micro, small and medium enterprises (MSMEs) to expand their participation in international trade. Yet, access to trade finance remains a significant constraint for small firms. Drawing on a primary survey of 700 export-oriented MSMEs, this paper examines the nature of this constraint and its implications for export growth. It finds that finance is among the first barriers encountered by firms seeking to enter or expand in export markets. Survey evidence suggests that a significant share of exporters receive payments only after 60 days or more, putting pressure on their working capital. High interest rates, lengthy approval processes and collateral requirements that frequently exceed loan values, further constrain access to formal credit. These challenges create a structural mismatch between the financing needs of MSME exporters and conventional credit assessment frameworks. Asset-light exporters may hold confirmed receivables but lack the collateral and established credit profiles typically required by lenders. As a result, the creditworthiness of the underlying receivable and buyer may not be adequately reflected in the financing terms available to suppliers. While the paper draws on evidence from India, the challenge is widespread among MSMEs globally, particularly across the Global South.
The paper argues that the outcomes of India’s 2026 BRICS Presidency provide a timely opportunity to address this gap. The Jaipur Consensus to Study the Establishment of an Invoice Discounting Mechanism proposes exploring a cross-border digital platform for financing confirmed export invoices, drawing on India’s Trade Receivables Discounting System (TReDS) experience. Complementing this, the BRICS Guiding Principles for Credit Assessment Frameworks for Export-Oriented MSMEs promote greater reliance on cashflow and transaction-level information. Implementing these initiatives will require complementary global and domestic reforms to digital trade-finance infrastructure, receivables verification, information sharing, risk assessment and regulatory frameworks.
