Exporters Urge Increase in Interest Subvention as Red Sea Crisis Impacts Costs and Demand

In the wake of the Red Sea crisis escalating costs for exporters, the clamour for a rise in interest subvention under the Interest Equalisation Scheme (IES) is growing. With subdued demand in key markets, exporters are seeking a boost in the scheme that is set to expire on June 30. The Commerce Ministry is likely to push for a five-year extension to provide relief to exporters. Under the IES, exporters, especially Micro, Small, and Medium Enterprises (MSMEs), benefit from reduced interest rates on pre and post-shipment credit. The Federation of Indian Export Organisations (FIEO) advocates for higher interest rebates to ease the financial burden on exporters grappling with increased costs and sluggish demand. The proposed changes aim to align India's credit costs with global standards to enhance competitiveness in the export sector.