(MENAFN- KNN India) New Delhi, Apr 29 (KNN) The government is conducting a comprehensive evaluation of the long-standing Interest Equalisation Scheme for exporters, scrutinising its efficacy in boosting exports, especially fr0m the Micro, Small and Medium Enterprise (MSME) sector.
As the current scheme nears its expiration on June 30, 2024, sources reveal that authorities are seeking clarity on its beneficiaries and impact to determine whether an extension or revisions are warranted, reported BL.
Initiated in April 2015 for a five-year term, the scheme enables exporters of 410 identified products and all MSME exporters to obtain bank credit at subsidised interest rates determined by the government.
Banks are subsequently reimbursed by the exchequer for their lower interest earnings. Despite multiple extensions, the scheme's continuity hangs in the balance.
“A detailed analysis of beneficiaries across sectors is crucial to pinpoint where the benefits are accruing and establish a correlation with export growth,” a government official stated.“If no direct correlation can be established, the government will decide whether to withdraw the scheme completely or selectively for certain sectors,” he added.
In a bid to ensure equitable distribution, the Commerce Ministry recently capped the annual net subvention amount at Rs 10 crore per Importer Exporter Code (IEC). This move prevents individual units fr0m monopolising the scheme's benefits.
With an additional Rs 2,500 crore outlay approved in December 2023, the scheme currently offers a 2 per cent interest equalisation benefit on pre and post-shipment rupee export credit for merchant and manufacturer exporters of 410 identified tariff lines, and a 3 per cent benefit for all MSME manufacturer exporters.
Exporter bodies have urged the government to increase the subsidy rate to 5 per cent for MSME exporters and 3 per cent for others, citing the need for enhanced competitiveness amidst global headwinds and geopolitical uncertainties.
India's goods exports declined 3.11 per cent to USD 437.06 billion in FY2023-24.
As the deadline looms, the government's review will shape the future of this long-standing export promotion initiative, striking a balance between fiscal prudence and bolstering the nation's export competitiveness.
(KNN Bureau)
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