- The Directorate General of Foreign Trade (DGFT) wants the continuation of the interest equalisation scheme for the export sector which is set to lapse on June 30.
- The scheme, which allows exporters of 410 identified products and all MSME exporters to access bank credit at a subsidised interest rate determined by the government.
- The Interest Equalisation Scheme (IES) aims to provide exporters with cheaper rupee credit for pre-shipment and post-shipment activities.
- Launched in April 2015 for five years later extended by 3 years.
- From October 2021, the subvention rates were revised to 3% for MSME manufacturers and 2% for merchant and other manufacturers exporting along 410 HS lines.
- It excludes segments benefiting from the PLI scheme.
- The Reserve Bank of India (RBI) implements the scheme with banks. The subsidy is provided by the banks, they are later reimbursed by the government for their lower interest earnings.
- The Directorate General of Foreign Trade (DGFT) and the Department of Commerce (DoC) oversee its approval and reimbursement process.
- Eligible exporters receive upfront interest subvention from banks.
- It helped to bring down exporter’s cost of credit and hence add to their competitiveness.
Dig Deeper: Compare the Interest Equalisation Scheme with The Production Linked Incentives scheme.
