1. Export Performance of MSMEs in India: Is Credit Constraint an Invisible Gorilla?
- Author
-
Supratik Deb and Gourishankar S. Hiremath
- Subjects
Constraint (information theory) ,biology ,biology.animal ,Gorilla ,Business ,Export performance ,Industrial organization - Abstract
We examine the effects of foreign currency borrowings (FCBs) and domestic market constraints on the performance of the export of the micro, small and medium enterprises (MSMEs) during the period 1988–2019. Our results show that access to the FCBs improved the performance of the MSME exports, indicating the importance of credit accessibility. MSMEs effectively utilise the grants when accompanied by credit facilities such as FCBs. We find that the high cost of debt and lack of financial development adversely affect the exports, as MSMEs are unable to borrow. The rupee depreciation alone does not help the MSMEs reap such depreciation benefits due to the lack of domestic credit. The recent policy stance of emphasis on MSMEs is expected to improve export performance. This study calls for the specialised window for the MSMEs to meet low cost and easy credit. The findings suggest stepping up grants to the MSMEs to improve the export performance. JEL Codes: F14, F34, F2, F31
- Published
- 2021
- Full Text
- View/download PDF