The Interest Equalisation Scheme is designed to support exporters by providing access to bank credit at subsidized interest rates. This initiative aims to lower borrowing costs for exporters, thereby enhancing their competitiveness in the global market.
Exporters of 410 identified products, along with all MSME (Micro, Small, and Medium Enterprises) exporters, are eligible to benefit from this scheme. The focus is on empowering a broad range of exporters to increase their market reach.
The scheme offers a 2% interest subvention for exporters in the identified sectors and a 3% subvention specifically for MSME exporters. Banks initially provide this subsidy, which is subsequently reimbursed by the government.
This scheme plays a vital role in helping exporters lower their credit costs. By making their products more competitive, it supports the overall export performance of the country. The reduction in borrowing costs facilitates greater engagement in international trade.
The scheme is scheduled to lapse on June 30, prompting discussions about its future. The DGFT is advocating for an extension, emphasizing the significant benefits it provides to exporters. Ongoing discussions with the Finance Ministry are focused on the duration and terms of any potential extension.
Exporters are requesting a 3-5 year extension of the scheme to ensure continuity and predictability in their operations. Additionally, they are seeking an increase in the subvention rates by 2%, arguing that current interest rates in India are higher than those in competing countries.
Currently, the Finance Ministry is resistant to increasing the subvention rates but is open to considering the extension of the scheme. The final decision will play a crucial role in determining the future support for India's exporters.
The ongoing push by the DGFT to continue the Interest Equalisation Scheme underscores its importance in bolstering India's export sector. The discussions with the Finance Ministry will ultimately shape the future parameters of this essential support mechanism.
Q1. What is the purpose of the Interest Equalisation Scheme?
Answer: The Interest Equalisation Scheme aims to provide exporters with subsidized bank credit, reducing their borrowing costs and enhancing competitiveness in international markets.
Q2. Who qualifies for the Interest Equalisation Scheme?
Answer: Exporters of 410 identified products and all MSME exporters are eligible for the benefits under the Interest Equalisation Scheme.
Q3. What are the current subsidy rates for MSME exporters?
Answer: MSME exporters receive a 3% interest subvention under the scheme, which helps lower their overall borrowing costs significantly.
Q4. What is the current status of the Interest Equalisation Scheme?
Answer: The scheme is set to expire on June 30, with discussions ongoing between the DGFT and the Finance Ministry regarding its extension and terms.
Q5. Why are exporters requesting an extension of the scheme?
Answer: Exporters seek a 3-5 year extension for stability and predictability, as well as an increase in subsidy rates to match international interest levels.
Question 1: What is the main objective of the Interest Equalisation Scheme?
A) To provide interest-free loans to exporters
B) To subsidize bank credit for exporters
C) To eliminate interest rates for MSME
D) To promote domestic sales
Correct Answer: B
Question 2: Which group of exporters qualifies for the Interest Equalisation Scheme?
A) Large Enterprises only
B) MSME exporters and identified product exporters
C) Only government-owned exporters
D) None of the above
Correct Answer: B
Question 3: What is the interest subvention rate for MSME exporters under the scheme?
A) 1%
B) 2%
C) 3%
D) 5%
Correct Answer: C
Question 4: What is the current status of the Interest Equalisation Scheme?
A) It has been permanently discontinued
B) It is set to lapse on June 30
C) It has been extended indefinitely
D) No information available
Correct Answer: B
Question 5: What do exporters request regarding the subsidy rates?
A) Increase by 5%
B) Increase by 2%
C) Decrease by 2%
D) No changes requested
Correct Answer: B
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