Export credit scheme’s validity to be extended

The validity of the interest equalization scheme for exporters might be increased by 2-3 years from the present September 30 deadline. Large manufacturing and merchant exporters are offered an interest subsidy of 3% on pre- and post-shipment rupee credit for the outbound shipment of 416 products (tariff lines). Manufacturing MSMEs, however, get a 5% subsidy on such credit to ship out any product. The government has set aside an outlay of INR 1,900 crore for the scheme for FY22.

“The commerce ministry is in talks with the finance ministry on this issue. A Cabinet note will be floated very soon,” a government official said. This decision will lend predictability to the policy regime and continue to support the pandemic-hit exporters with cheaper credit at a time when they are striving to reap the benefits of a resurgence in global demand for merchandise. Inadequate credit flow to exporters has been a nagging issue for the past three years before the recent pick-up.