Interest equalisation scheme for exporters extended for another month

The government has extended the Interest Equalisation Scheme for pre- and post-shipment rupee export credit until September 30, 2024, in a bid to support the country’s export sector. This extension follows the scheme’s previous expiration on August 31. Originally introduced in April 2015, the scheme offers financial benefits to exporters by subsidizing interest rates on rupee export credits, which aids in making Indian exports more competitive in the global market.

The Directorate General of Foreign Trade (DGFT) announced this extension through a trade notice, indicating that it will now be applicable exclusively to Micro, Small, and Medium Enterprises (MSMEs) engaged in manufacturing. This targeted support reflects the government’s continued commitment to bolstering key sectors within the export industry.

On December 8, 2023, the Union Cabinet approved an additional allocation of Rs 2,500 crore to sustain the scheme until June 30, 2024. This new allocation, combined with the existing Rs 9,538 crore, addresses funding gaps and ensures ongoing support for exporters during challenging economic conditions. The scheme, which had been previously extended during the Covid-19 pandemic, demonstrates the government’s adaptive measures to maintain export momentum.

Despite positive trends earlier in the year, India’s exports experienced a contraction of 1.5 percent in July, falling to USD 33.98 billion. This decline, coupled with a widening trade deficit of USD 23.5 billion, underscores the importance of continued support through mechanisms like the Interest Equalisation Scheme. From April to July this fiscal year, exports increased by 4.15 percent, but imports also rose by 7.57 percent, highlighting the complex dynamics of international trade.