In a recent development, the government is closely evaluating the interest equalisation scheme for exporters to assess its effectiveness in promoting exports, particularly from the MSME sector. The scheme, which has been in place since April 2015 and is set to expire on June 30, 2024, provides exporters with subsidised bank credit determined by the government.
The Directorate General of Foreign Trade (DGFT) is conducting consultations with export bodies and banks to determine the scheme’s impact on export growth. The scheme, which has received multiple extensions over the years, aims to boost exports by providing lower interest rates on bank credit to exporters.
Despite recent funding injections to sustain the scheme, the government is considering whether to modify or discontinue it based on its impact on export growth. Export bodies have urged for increased subsidy rates to enhance competitiveness in the face of global challenges.
As India’s exports took a hit in FY 2023-24, the government’s decision on the interest equalisation scheme will be critical for the export sector’s future growth and competitiveness.
