Interest Equalisation Scheme for exporters extended for 2 months ; FIEO disappointed

NEW DELHI : The Commerce Ministry on Friday extended pre and post-shipment rupee export credit till August under the Interest Equalisation Scheme (IES) for Micro, Small & Medium Enterprises (MSME) exporters.

A notification released by the Directorate General of Foreign Trade (DGFT) said that the extension is applicable only for MSME Exporters, with the total outlay of the scheme capped at Rs 750 crore for the extended two-month period.

“Such extension is made with the same terms and conditions as the present scheme,” said the official notification.

Ashwani Kumar, President of the Federation of Indian Export Organisations (FIEO), expressed disappointment for exporters who are exporting products under 410 tariff lines.

“If they are not manufacturer MSMEs, this may affect exports of labour-intensive products, which have lost market share in the past few years, as many merchant exporters play a pivotal role in exporting such products. Exports from some large companies may also be impacted,” said Kumar.

Earlier, exporters had urged the government to extend the scheme to offer a lifeline to small exporters grappling with high interest rates and faltering exports. Through the scheme, banks provide loans to exporters at reduced interest rates, and the lenders are thereafter compensated by the government. The scheme was launched nearly a decade ago to reduce stress among exporters, particularly in labour-intensive industries and MSMEs.

Currently, the rate of interest equalisation is 2 per cent for some manufacturers and merchant exporters for 410 identified products and 3 per cent for MSME manufacturers.

A budgetary outlay of Rs 9,538 crore was allocated to the scheme. However, the amount was not enough to cover the scheme until March 31. The government subsequently made an additional outlay of Rs 2,500 crore earlier this year.