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Govt announces 3 per cent interest subsidy scheme for exporters

19 Nov 2015 Evaluate

In order to boost overseas shipments after continuous decline in exports, the government has announced 3 per cent interest subsidy scheme for exporters, which will have a financial implication of about Rs 2,700 crore.  In a meeting of Cabinet Committee on Economic Affairs headed by Prime Minister Narendra Modi, the government gave its approval for 'Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Pre and Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years'.

The scheme would be available to all exports of Micro, Small and Medium Enterprises (MSME) and 416 tariff lines. But it would not be available to merchant exporters. The rate of interest equalisation would be 3 percent and it will be evaluated after three years. Though, the financial implication of the proposed scheme is estimated to be in the range of Rs 2,500 crore to Rs 2,700 crore per year but the actual implication would depend on the level of exports and the claims filed by the exporters with the banks.

Under the scheme, exporters get loans at affordable rates, which help them ship more goods to foreign markets. The scheme would be implemented through funds available with the Department of Commerce under non-plan during 2015-16 and the restructured scheme would be funded from plan side from 2016-17 onwards. Funds worth Rs 1,625 crore in the non-plan head of account are available under Demand of Grants for 2015-2016 and would be made available to the Reserve Bank

The scheme will help the identified export sectors to be internationally competitive and achieve higher level of export performance. India's exports remained in the negative territory for the 11th month in a row in October, registering a dip of 17.53 per cent to $21.35 billion due to a demand slowdown.

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