The government has extended the validity of the interest equalisation scheme for exporters until March 2024. But it has trimmed the subsidy support, given the current lower interest regime, and kept out from its purview those exporters who are already benefitting from various production-linked incentive (PLI) schemes.
The move is expected to lend predictability to the policy regime and continue to support Covid-hit exporters with cheaper credit at a time when the Russia-Ukraine conflict has caused massive supply chain disruption. The scheme was earlier valid until September 30, 2021.
Under the revised scheme, large manufacturing and merchant exporters will get an interest subsidy of 2% on pre- and post-shipment rupee credit for the outbound shipment of 410 products (six tariff lines relating to telecom have been excluded), compared with 3% earlier. Similarly, the subsidy for manufacturing MSMEs will be reduced to 3% from 5%.
However, the reduced interest subvention will take effect from April 1, 2022 and exporters will continue to get the higher support between October 2021 and March 2022.
The government had earlier budgeted Rs 1,900 crore for the scheme for FY22, compared with Rs 1,600 crore (revised estimate) for FY21.
Official sources said the interest subvention was reduced to suit current realities, given that interest rates have declined substantially from the levels when the scheme was rolled out.
Hailing the move, A Sakthivel, president of the apex exporters’ body FIEO, said it will provide policy stability at a time when export orders are flowing to India in the wake of an industrial resurgence in advanced economies and reduce their liquidity requirement proportionately. Of course, the ongoing Ukraine crisis is weighing on their ability to supply.