The interest equalisation scheme for exporters, which allows access to bank credit at a subsidised rate, will be extended only for the MSME sector beyond June 30 for two months, per a government notification.
“Claims of non-MSME exporters are not to be entertained beyond June 30, 2024,” a trade notice issued by the Directorate General of Foreign Trade on Friday stated.
₹750-cr outlay
The two-month continuation of the scheme for the MSME sector comes with an outlay cap of ₹750 crore, the notice added. All other terms and conditions remain the same.
Non-MSME exporters are disappointed with the discontinuation of the popular scheme for the 410 products that were earlier eligible for the benefit as they had hoped for its extension by 3-5 years. “This may affect exports of labour intensive exports which have lost market share in past few years, as many merchant exporters are playing pivotal role in exporting such products and exports of such products from some large companies may also be impacted,” according to Ashwani Kumar, President, FIEO.
First implemented in April 2015 for five years, the scheme got extended several times with the last extension set to lapse on June 30 2024. At present, the scheme provides a 2 per cent interest subvention or subsidy on loans taken by exporters from 410 identified sectors and a 3 per cent subvention to exporters of all products from the MSME sector.
The government’s decision to not continue the scheme for non-MSME exporters was taken after the Finance Ministry asked the DGFT to conduct a study to find out its usefulness. The DGFT held consultations with exporters as well as banks and gave its report where it supported its continuation, officials tracking the matter said.
In its submission to the government, exporters’ body FIEO had said that the interest equalisation scheme provided much needed competitiveness to Indian exports and should be continued for 3-5 years. It also made a case for higher subvention rates arguing that interest rate in India was much higher than the rates in competitor countries.