Union Cabinet approves Rs 2,500 crore for Interest
Union Cabinet chaired by Prime Minister Narendra Modi has approved an
additional allocation of Rs 2,500 crore for the continuation of the Interest
Equalisation Scheme till June 30, 2024, said a press release issued by the
Commerce and Industry ministry on Friday.
would help exporters from identified sectors and all MSME manufacturer
exporters to avail of pre and post-shipment Rupee export credit at competitive
benefit shall be continued till 30.06.2024 to manufacturer and merchant exporters
of the identified 410 tariff lines and to all manufacturer exporters from MSME
sectors at rates, as specified below: For Manufacturer and Merchant Exporters
exporting products listed in the 410 tariff lines, the Rate of interest
Equalisation is 2 per cent; for MSME exporters of all tariff lines, the Rate of
interest Equalisation is 3 per cent.
scheme shall be implemented by RBI through various Public and non-public Sector
banks that provide pre and post-shipment credit to the exporters. The Scheme is
jointly monitored by DGFT (Directorate General of Foreign Trade) and RBI
through a consultative mechanism.
of pre and post-shipment packing credit at competitive rates is important for
the export sector to compete internationally.
effect of the Interest Equalisation Scheme has been beneficial for the export
growth of the country as per the study conducted by IIM Kashipur.
sector is vital for employment generation. The scheme is primarily meant for
the labour-intensive sectors.
present proposal is meant for exports by merchants and manufacturer exporters
of identified tariff lines and MSME Sector manufacturer exporters. An increase
in exports from these employment-intensive sectors and MSMEs would lead to the
generation of employment in the country.
additional outlay of Rs 2,500 Crore, over and above the current outlay of Rs
9,538 Cr under the Scheme, is made available to bridge the funding gap to
continue the Scheme up to 30.06.2024. The estimated annual expenditure under
the Scheme is approximately Rs 2,500 Crore.
intended target beneficiaries include all MSME manufacturer exporters and
non-MSME exporters of certain identified sectors belonging to 410 tariff lines
at the four-digit level.
Scheme was started on April 1, 2015, and was initially valid for 5 years up to
Scheme has been continued thereafter, including a one-year extension during
COVID, and with further extensions and fund allocations.
the Scheme provides an interest equalisation benefit at the rate of 2% on pre
and post-shipment Rupee export credit to merchant and manufacturer exporters of
410 identified tariff lines at 4 digit level and 3% to all MSME manufacturer
Scheme was not fund-limited and extended the benefit without any limit to all
exporters. The Scheme has now been made fund-limited, and benefits to
individual exporters have been capped at Rs 10 Cr per annum per IEC (Import
addition, the banks that lend to exporters at an average rate of more than Repo
+ 4% would be debarred under the Scheme.