Interest equalisation scheme for exporters extended by 3 months

By: |
July 02, 2021 8:14 AM

The government has budgeted Rs 1,900 crore under the scheme for FY22, against Rs 1,600 crore (RE) for FY21. This scheme usually allows manufacturing and merchant exporters an interest subsidy of 3% on pre-and-post-shipment rupee credit for exports of 416 products (tariff lines).

RBIThe central bank’s notification came after the government approved the extension of the scheme, with “same scope and coverage”.

The Reserve Bank of India (RBI) on Thursday extended the validity of the interest equalisation scheme for pre-and-post-shipment rupee export credit by three months through September 30. This will continue to help exporters struggling to cope with the damage caused by the second Covid wave.

The government has budgeted Rs 1,900 crore under the scheme for FY22, against Rs 1,600 crore (RE) for FY21. This scheme usually allows manufacturing and merchant exporters an interest subsidy of 3% on pre-and-post-shipment rupee credit for exports of 416 products (tariff lines).

The central bank’s notification came after the government approved the extension of the scheme, with “same scope and coverage”. The move comes at a time when the country’s exports have staged a rebound after witnessing a roller-coaster ride in the wake of the pandemic last fiscal.

Merchandise exports surged over 69% in May from a year before to $32.3 billion, driven by a favourable base and improved demand from key markets. Importantly, goods exports have now crossed the pre-Covid (same months in 2019) level for three straight months, in what appears to be a strengthening trade recovery.

Of course, export growth was low even before the pandemic — outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So only a sustained uptick over the next 2-3 years would help recapture the lost heights.

Hailing the extension, A Sakthivel, president of the exporters’ body FIEO, said the scheme will “help the identified export sectors to be internationally competitive and to achieve a higher level of export performance”.

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