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Interest subsidy scheme for exporters extended 2 months for MSME sector
Industry News- Jul 01,24
The two-month continuation of the scheme for the MSME sector comes with an outlay cap of Rs 7.5 billion, while all other terms and conditions remain the same.
The interest equalisation scheme for exporters, which facilitates access to bank credit at subsidised rates, will be extended exclusively for the MSME sector beyond June 30, 2024, for a period of two months, according to a recent government notification.
A trade notice issued by the Directorate General of Foreign Trade specified that "Claims of non-MSME exporters are not to be entertained beyond June 30, 2024." The extension for the MSME sector comes with a capped outlay of Rs 7.5 billion, over the two-month period, maintaining all existing terms and conditions.
Non-MSME exporters have expressed disappointment over the discontinuation of the scheme, which previously benefited 410 eligible products. They had hoped for an extension of 3-5 years to sustain competitiveness in labour-intensive exports, where merchant exporters play a crucial role. Ashwani Kumar, President, FIEO, noted concerns that this decision could impact exports adversely, particularly for products from large companies.
Initially launched in April 2015 for a five-year period, the scheme has been extended multiple times, with the most recent extension slated to end on June 30, 2024. Currently, the scheme offers a 2% interest subvention on loans taken by exporters from the 410 identified sectors, and a 3% subvention specifically for MSME sector exporters across all products.
The government's decision not to continue the scheme for non-MSME exporters follows a directive from the Finance Ministry to assess its effectiveness. The DGFT conducted consultations with exporters and banks, ultimately recommending its continuation. FIEO advocated for extending the scheme for 3-5 years, emphasising its role in enhancing export competitiveness and bridging the interest rate differential with competitor countries.
(Source: BusinessLine)
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