(MENAFN- KNN India)
New Delhi, Dec 17 (KNN) The Federation of Indian Export Organisations (FIEO) has called on the government to extend the interest equalisation scheme for at least five more years, starting from December 31, 2024.
The plea comes in response to the sharp decline in India's merchandise exports. FIEO President Ashwani Kumar emphasised the need for deeper liquidity support, urging the government to create a predictable business environment for exporters.
The interest equalisation scheme, introduced in April 2015, has been extended multiple times. It offers interest benefits of 2 per cent on pre- and post-shipment rupee export credits for merchant and manufacturer exporters, and 3 per cent for MSME manufacturers.
The rebate is reimbursed by the government to the banks. However, the recent cap of Rs 50 lakh per company in this scheme has adversely affected many MSMEs, limiting their ability to take on new orders.
In light of this, FIEO has recommended raising the cap to Rs 10 crore per MSME and extending it to 410 tariff lines for five years.
Kumar pointed out that the recent restrictions have left many MSMEs struggling with liquidity, unable to benefit further from the scheme.
This has compounded the challenges posed by ongoing international trade disruptions, global economic uncertainties, and the rising tensions in the Middle East, particularly between Israel and Iran, which have disrupted trade routes.
These tensions have especially impacted trade through the Red Sea and the Gulf region, both vital for Indian exports to Europe, Africa, and the CIS countries.
India's exports have seen a decline, with a 4.85 per cent contraction in November, dropping to USD 32.11 billion compared to the previous year.
This has been exacerbated by a widening trade deficit, which reached a record high of USD 37.84 billion in November, partly due to increased gold imports.
Despite this, MSME exports reached Rs 12.39 lakh crore during April-November 2023, a notable increase from Rs 8.55 lakh crore in FY23.
FIEO's call for continued support is crucial as India faces both domestic and global challenges in maintaining export growth.
(KNN Bureau)
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