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Informist, Wednesday, Mar. 19, 2025

 

By Krity Ambey

 

NEW DELHI - With an aim to reboot the Interest Equalisation Scheme, the commerce ministry is going to ask the finance ministry to raise the outlay for Export Promotion Mission proposed in the Budget for 2025-26 (Apr-Mar), a senior official from the trade ministry said. The finance ministry has earmarked INR 22.50 billion under the Export Promotion Mission that is expected to include a set of schemes to boost India's exports growth.

 

The current allocation under the Export Promotion Mission is low because the finance ministry has not accounted for the Interest Equalisation Scheme, which alone used to have an outlay of nearly INR 30 billion, the official told Informist. "We are trying to push Interest Equalisation Scheme as part of this (Export Promotion Mission)," the official added. "If we manage to convice finance ministry that it is a beneficial scheme, then we will also push for higher outlay."

 

The Interest Equalisation Scheme, under which exporters could avail pre- and post-shipment credit at a subsidised rate, ended on Dec. 31. The finance ministry wanted to end the Interest Equalisation Scheme in FY24 itself, but it got multiple three-month extensions last year after requests from the commerce ministry and export promotion councils. However, the government did curtail the benefits under the scheme. 

 

Initially, under the scheme, exporters from micro, small and medium enterprises could avail interest subvention on pre- and post-shipment credit on all tariff lines, and merchant exporters could avail the benefit for select tariff lines. But the government restricted the benefits of the scheme to MSME exporters last year. It also capped the fiscal benefits under the scheme for each exporter to INR 5 million per annum.

 

The Interest Equalisation Scheme massively helped Indian exporters compete against their Asian peers, who can avail credit at a much cheaper rate, the official said. But the finance ministry was trying to see a corelation between the scheme and India's exports growth, the official added. India's merchandise exports had falllen 3% in FY24, and in this fiscal year as well, the exports have been nearly flat in Apr-Feb. 

 

The official said the trade ministry will pitch for reboot of the credit subvention scheme, request higher allocation under Export Promostion Mission, alongwith details of other measuress to support exports growth, in the Export Finance Committee note in three weeks. "So the outlay has been decided, but we have to go back to finance (ministry) with an expenditure finance commission note, which will present the details of the schemes, and the outlay for each scheme," the official said.

 

There may be four to five sub-components under the Export Promotion Mission, the official said, citing Market Access Initiative Scheme, export credit-related interventions to reduce demand of collaterals by financial institutions for loans to MSMEs, and a mechanism to help support MSMEs who face non-tariff barriers abroad. Under the Market Access Initiative Scheme, the government carries out research to identify the right products for an international market, then implement a country-specific strategy to boost exports. The government also provides financial assistance to exporters to sell more of their products by funding activities related to market expansion.  End

 

Edited by Vandana Hingorani

 

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