SharePoint Online External Users access for custom list not for library

Dear SharePoint Experts,

I need the help from you,

We are using SharePoint online PWA portal for the business need. Here, we are trying to grant read access to External users(out of organisation users) for specific SharePoint custom list. However we are getting the error "Your organization's policies don't allow you to share with these users. Go to External Sharing in the Office 365 admin center to enable it."

Note:: I am able to grant the access to external users for SharePoint libraries from the same site. But unable to grant it for list.

Best Regards,

Madhu Vana