With additional duties under the US President Donald Trump reciprocal tariff plan coming into force in the next two days, exporters will ask the government to bring back the interest subsidy scheme that expired on December 31, 2024.
The exporters have asked the government that the Interest Subvention Scheme (IES) in its relaunch provide 5% subsidy as against 3% that was given in the just concluded scheme. This 3% subsidy was provided to micro, small and medium enterprises on pre-shipment and post-shipment export credit.
Prior to June 30, 2024 the scheme also covered merchant exporters who source goods for exports from other manufacturers but their benefit was capped at 2% for exports of 410 identified products. The subsidy on loans to exporters are then reimbursed by the government.
In the re-launch of IES exporters say that the subsidy should be raised to 5% and the benefit be extended to all exporters.
“High tariffs will put an additional burden on importers and for that they would have to seek credit and delay payments. This will lead to a liquidity crunch for exporters.The request the government to immediately announce IES for all the exporters,” FIEO President SC Ralhan told PTI.
In India exporters get credit at 8-12% whereas the policy rate stands at 6.25%. Exporters say that export credit in countries they are competing with is priced at 2-3%.
While the IES was not extended, the budget for this financial year has announced Rs 2,250 crore Export Promotion Mission (EPM). Interest Equalisation Scheme (IES), Lab Grown Diamonds (LGD) and Market Access Initiative (MAI) have been subsumed in the EPM.
While EPM will seek to lower the cost of credit to exporters, the scheme will take time to finalise and get operational. Even the parliamentary standing committee on commerce has asked the government to revive the IES till EPM gets functional.