In order to provide stability to exporters and help them in fair pricing, the Center is likely to extend the interest equalization scheme for exporters by three-five years instead of doing so on a piece-meal basis for a few months at a time. is investigating. their products.
“As part of the new foreign trade policy to be implemented in October this year, the commerce ministry may extend the interest subsidy scheme for a longer period of three-five years,” the official said.
The Interest Equalization Scheme for five years as part of FTP 2015-20, launched on April 1, 2015, is an important provision to help exporters meet their need for cheap funds. It provides interest subsidy on pre- and post-shipment export credit of between 3 per cent and 5 per cent.
Banks provide loans to exporters at low interest rates and the difference amount is later reimbursed by the government. Apart from MSME exporters of all commodities, exporters of 416 identified products are eligible for the benefit.
“Due to the COVID-19 pandemic, the announcement of the new five-year FTP could not be done as scheduled on April 1, 2020 and the earlier one was extended by one year. The interest subvention scheme has also got an extension of one year. However, in the current financial year, the scheme was extended twice for a period of three months each. This creates uncertainty for the exporters,” the official explained. Exporting bodies like FIEO, have been petitioning the government for a longer extension of the scheme. The certainty about the continuity of the scheme will help the exporters to price their products competitively as they will be able to factor in the discount without worrying about roll backs.
The scheme was last extended from July to September 30, 2021.
long term extension
“The commerce ministry is in discussion for long-term extension of the interest equalization scheme and may soon work out a note for the approval of the Expenditure Finance Committee,” the official said.
India’s exports suffered a setback in 2020-21 due to the Covid-19 pandemic and outbound shipments declined by 7.26 per cent (Y-o-Y) to $290.63 billion.
However, with global demand picking up again, things seem to be improving with exports, in the April-July 2021 period, at $130.53 billion, up 73.51 per cent and 21.82 per cent over the same period of 2020. Same period of 2019.
The commerce ministry has set an ambitious export target of $400 billion for the current fiscal.
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