(MENAFN- KNN India)
New Delhi, Jul 20 (KNN)
The Directorate General of Foreign Trade (DGFT) is preparing a proposal to extend the Interest Equalisation Scheme for all exporters, including those outside the Micro, Small, and Medium Enterprises (MSME) sector.
The scheme, which provides subsidised interest rates on bank credit for exporters, lapsed on June 30, 2024, for all beneficiaries except MSMEs, reported businessline.
According to official sources, the DGFT, operating under the Commerce Department, will present the proposal to the Expenditure Finance Committee (EFC) for approval.
If endorsed, the proposal will be forwarded to the Union Cabinet for final clearance.
The Interest Equalisation Scheme, initially implemented in April 2015, has undergone several extensions since its inception. It offers subsidised interest rates to exporters of 410 identified products and all MSME exporters.
The government compensates banks for the reduced interest earnings resulting from this scheme.
Following its expiration on June 30, 2024, the scheme was extended for two months exclusively for the MSME sector.
This limited extension was intended to allow the Commerce & Industry Ministry time to formulate a comprehensive proposal for its continuation.
The DGFT's proposal suggests maintaining the previous interest equalisation rates of 2 per cent for merchant and manufacturer exporters of the 410 identified tariff lines, and 3 per cent for all MSME manufacturer exporters.
Despite appeals from export bodies for higher subvention rates, the Commerce Department is advocating for the continuation of existing rates.
The scheme's extension hinges on approval from the Finance Ministry, which chairs the EFC. The Ministry is seeking concrete evidence of the scheme's effectiveness in boosting exports, although establishing a direct correlation remains challenging.
Proponents of the scheme argue that it is necessary to maintain the competitiveness of Indian exporters in the global market, particularly in comparison to countries with lower interest rates.
The Commerce & Industry Ministry contends that the scheme helps offset the impact of domestic monetary policies on export competitiveness.
As discussions continue, the potential extension of the Interest Equalisation Scheme remains a key topic for India's export sector, with implications for the country's overall economic strategy and international trade position.
(KNN Bureau)
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