The Directorate General of Foreign Trade (DGFT) has recommended extending the interest equalisation scheme for exporters beyond June 30th. This scheme allows exporters to access cheaper credit from banks, making their products more competitive in the global market.
The DGFT consulted with exporters and banks and found the scheme to be effective in reducing borrowing costs for exporters. They are now in talks with the Finance Ministry to determine the extension’s duration.
While exporters are pushing for a 3-5-year extension and higher subsidy rates, the Finance Ministry is hesitant about the latter. Exporters argue that higher interest rates in India compared to competitors necessitate increased support.
The scheme, launched in 2015, provides a 2% interest rate subsidy for specific sectors and 3% for MSMEs. Banks upfront provide the benefit to exporters and are later reimbursed by the government.
Exporters’ body FIEO has emphasised the scheme’s importance in boosting Indian export competitiveness and urged the government to consider higher subsidy rates.
