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Informist, Wednesday, Dec. 18, 2024

 

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--DGFT: High interest rates need to be neutralised through credit schemes 
--DGFT: Working with fin min to facilitate cheap credit for exporters 
--DGFT: Working to cover e-commerce exporters under duty rebate schemes 
--DGFT: Focusing on aiding export competitiveness via tax rebate plans 
--DGFT: Hope to convince fin min to extend interest equalisation scheme 
--DGFT:Struggling to convince fin min on interest equalisation plan benefits 
--CONTEXT: DGFT Sarangi at CII's National Exports Competitiveness Summit

 

NEW DELHI – The commerce ministry is struggling to convince the finance ministry about the relevance of the Interest Equalisation Scheme, but it is hopeful that it will convince the latter to extend the scheme beyond Dec. 31, Director General of Foreign Trade Santosh Sarangi said. The scheme was extended by three months in September. 

 

"We have a very high interest rate vis-a-vis our peers... This has been a big deterrent for our exporters (competitiveness)," Sarangi said at the fourth National Export Competitiveness Summit organised by the Confederation of Indian Industry Wednesday. "Over the years, schemes like the Interest Equalisation Scheme have been able to partially neutralise the very high interest rate that our exporters face. But of late, we have been struggling to convince the finance ministry regarding the relevance of a scheme like IES."

 

Under the Interest Equalisation Scheme, exporters from micro, small and medium enterprises can avail interest subvention on pre- and post-shipment credit. The finance ministry has shown reluctance in extending the scheme, and the government has also curtailed the benefits under the scheme. Earlier, merchant exporters also got credit at a subsidised rate under the scheme. The government has also capped the fiscal benefits per exporter to INR 5 million per annum.

 

"Our repo rate is 6.5%, whereas the rate in many Southeast Asian economies is 2.5-3.5%. Over and above that, the spread by the banks is in the range of 4-5% and for MSMEs, it can be higher," Sarangi said. There is a need to neutralise the high interest rate through credit schemes, Sanangi said. 

 

The government also wants to support the e-commerce sector to boost India's competitiveness, Sarangi said. "For e-commerce exporters, access to financing is a big challenge. So we are talking to EXIM Bank to create instruments through which banks will be encouraged to support them."

 

The government is working to extend the benefits under its tax rebate scheme, Remission of Duties and Taxes on Exported Products Scheme, to e-commerce exporters. Under the scheme, the government reimburses the duties and taxes paid by exporters on imported inputs. Recently, the government expanded the benefits of the scheme to exporters from special economic zones and export-oriented units.  End

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

 

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