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INTEREST EQUALISATION SCHEME FOR EXPORTERS:SIMPLIFIER



  Jun 19, 2024

INTEREST EQUALISATION SCHEME FOR EXPORTERS



BASICS OF THE INTEREST EQUALISATION SCHEME

What is the Interest Equalisation Scheme?

The Interest Equalisation Scheme provides exporters with access to bank credit at subsidized interest rates. It is aimed at reducing the cost of borrowing for exporters and enhancing their competitiveness.

Who benefits from the scheme?

Exporters of 410 identified products and all MSME (Micro, Small, and Medium Enterprises) exporters are eligible for the scheme.

What are the subsidy rates under the scheme?

The scheme offers a 2% interest subvention for exporters in the identified sectors and a 3% subvention for MSME exporters. Banks provide the subsidy and are later reimbursed by the government.

Why is the scheme important?

The scheme helps exporters reduce their credit costs, making their products more competitive in the global market. It is crucial for maintaining and boosting export performance.

What is the current status of the scheme?

The scheme is set to lapse on June 30. The DGFT is advocating for its extension, citing its benefits for exporters. The duration and terms of the extension are under discussion with the Finance Ministry.

What are the exporters’ demands regarding the scheme?

Exporters are requesting an extension of the scheme for 3-5 years to ensure continuity and predictability. They are also asking for an increase in the subvention rates by 2%, arguing that interest rates in India are higher than those in competitor countries.

What is the Finance Ministry’s stance?

The Finance Ministry is currently not in favor of increasing the rates of subvention, although it is considering the extension of the scheme.

CONCLUSION

The DGFT’s push for the continuation of the Interest Equalisation Scheme highlights its significance in supporting India’s export sector. The ongoing discussions with the Finance Ministry will determine the future scope and terms of the scheme.



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