Context: MSME compliance burden
The Union Government has initiated inter-ministerial consultations to assess the challenges faced by MSME exporters in the backdrop of the ongoing West Asia conflict, which has led to shipping disruptions, rerouting of cargo, and regulatory uncertainties, thereby increasing the compliance burden and operational costs.
Importance / Significance of MSMEs
• Total enterprises: 6.33 crore
• GDP contribution: ~30%
• Exports contribution: ~45%
• Employment: ~11.1 crore people
• Structure: Micro enterprises ≈ 99%
Issues Faced by MSMEs
- Compliance burden ↑ → Frequent changes in tariffs, penalties
- Shipping disruptions → Cargo rerouting / return
- Back-to-town cargo issue → Storage + reprocessing cost
- Cost uncertainty → No clarity on total landed cost
- Capacity constraints → Lack of compliance teams/software
- Port diversion problems → Exporters manage logistics themselves
- Tariff quota delays → Especially Europe (~90 days wait)
- Cost escalation → Duties, warehousing, delays
- Loss of competitiveness → Higher cost + delayed delivery
