India’s exporters are winning. The money hasn’t caught up

India’s MSME exporters are gaining share as global supply chains shift. But a gap is emerging between how these businesses operate and how credit reaches them.
MSMEs account for nearly 46% of India’s exports, according to Ministry of Commerce data. They form a major part of the country’s export base. The constraint they face is no longer demand or capacity, but the stretching of working capital cycles linked to export transactions.

Recent trade and logistics data point to a shift. Shipping disruptions across key routes have extended transit times by 20–30 days, while receivable cycles have lengthened from 60–90 days to around 90–120 days. Costs are typically incurred upfront, often in dollars, while revenues are realised later, in rupees. Across a large volume of transactions, this delay translates into sustained liquidity pressure.


Currency movements are adding to the complexity. The rupee weakened to around Rs93–94 per dollar in 2026, after trading near Rs84 in early 2025, reflecting higher oil prices and sustained capital outflows. It touched a record low of Rs93.94 in March amid geopolitical tensions. India has also recorded a balance of payments deficit for two consecutive years, while foreign portfolio outflows have remained elevated.

A weaker currency typically supports export realisations. However, for many MSMEs, this is offset by higher dollar-linked input and freight costs. Limited use of formal hedging also leaves smaller exporters exposed to currency volatility.

The pressure is not confined to manufacturers. Freight forwarders, who manage logistics, documentation and shipment flows, are increasingly absorbing higher freight costs while extending credit across longer payment cycles. This shifts liquidity pressure across the supply chain without a corresponding expansion in formal financing.

Policy measures have aimed to stabilise conditions. The Reserve Bank of India has extended export credit tenors to 450 days and allowed up to 15 months for export realisation, alongside interest subvention and credit guarantee support. Export credit outstanding has grown by around 15% year-on-year, indicating rising demand for financing as cash cycles lengthen.

These interventions have supported system-level liquidity. However, they do not fully address the mismatch at the transaction level between the timing of costs and the receipt of payments.

Estimates from SIDBI and Crisil suggest India’s MSME sector faces a credit gap of around Rs30 lakh crore ($350+ billion). This reflects not only limited credit supply, but also the difficulty of applying traditional underwriting models to businesses operating with variable cash flows and extended trade cycles.

At the same time, the underlying financial infrastructure has evolved significantly. Digital payment adoption among MSMEs is high, generating transaction-level data, receivable histories and operating signals at scale. What remains underdeveloped is the credit layer built on top of this infrastructure that can assess risk dynamically and deploy capital in line with business cycles.

This gap between available data and accessible credit is becoming more relevant as export cycles lengthen. It has implications not just for MSMEs, but also for India’s broader export competitiveness.

In a trade environment shaped by disruption and delays, the ability to manage working capital efficiently is becoming increasingly important. Firms that can finance longer cycles and maintain delivery reliability are likely to remain competitive, regardless of underlying cost advantages.

India’s export opportunity remains significant. Its ability to sustain and scale that opportunity will depend, in part, on how effectively capital moves through the system to support it.

Author is Ajitabh Bharti, Co-founder and Executive Director of CapitalXB. Views are personal.