The government on Friday announced two interventions with a total outlay of Rs 7295 crore that will reduce the cost of credit for small exporters over the next six years ending March 2031.
The interest subvention scheme makes a comeback under the Export Promotion Mission after a year in a changed format and rate of subsidy for pre and post shipment credit. The collateral support for small exporters increases guarantee cover for working capital loans by another 10%.
Bridging the Trade Finance Gap for MSMEs
Under the Rs 5181 crore interest subvention scheme the subsidy on credit has been capped at 2.75% and only Micro Small and Medium Exporters (MSMEs) from labour intensive sectors have been made eligible for the concession. MSMEs currently pay anywhere between 9.5% to 12.5% for export credit and the subsidy will make them competitive in the tough global trade environment.
Even with the cap 75% of the total tariff lines would be covered. The interest rate subvention that has been capped at 2.75% for now will be benchmarked against the REPO or policy rates of India and comparable economies and would be adjusted as the interest rates move, additional secretary in the department of commerce Ajay Badhoo said.
When the policy rates go down the subsidy will also come down, The rates will be adjusted every March and September, he said. The scheme also has capped the benefit per exporter at Rs 50 lakh a year and an additional interest subsidy will be provided to MSMEs exporting to new and emerging markets, Badhoo said. The additional benefit will be notified separately.
Defence and Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET)-notified products have been included to support strategic exports. Detailed operational guidelines for this intervention will be issued by the Reserve Bank of India
Of the total allocation for interest subvention of Rs 5181 crore, around Rs 850 crore will be used this year for settling the claims of the previous interest subvention scheme that expired in December 2024. For the current financial year Rs 300 crore would be required for the subsidy as just a quarter remains. The earlier scheme that expired in December 2024 provided a flat interest subsidy of 3%.
Scaling Up Collateral Security
For collateral support for export credit Rs 2114 has been allocated for use between 2025-2031. The scheme will offer an additional 10% guarantee coverage over the existing 75% Credit Guarantee Fund Trust for Micro and Small Enterprises (GTMSE) support for MSMEs. The outlay for collateral support for this financial year has been kept at Rs 100 crore.
Guarantee coverage of up to 85% will be provided for Micro and Small exporters and up to 65% for Medium exporters, with a maximum outstanding guaranteed exposure of Rs 10 crore per exporter in a financial year. Enhanced credit duarantee will also help in reducing the cost of credit.
Both the interventions announced on Friday are part of the Niryat Protsahan part of the Rs Rs 25060 crore EPM that has 11 components to increase the competitiveness of Indian exports.
The outlay for Niryat Protsahan is Rs 10,401 crore while for Niryat Disha Rs 14.659 crore has been kept aside. Niryat Disha is for supporting non-financial enablers like market access, export branding, compliances, logistics and trade intelligence. The first component of the EPM under Niryat Disha, the Rs 4531 crore Market Access Support (MAS) was rolled out on December 31, 2025.