Recently, the Indian Union Cabinet agreed on an additional financing of Rs 2500 Cr to extend the Interest Equalization Scheme till June 30, 2024. Initially introduced on April 1, 2015, this five-year initiative seeks to increase exports by offering subsidized pre- and post-shipment rupee export credit to qualified exporters.
1. Interest Subsidy: The scheme offers an interest equalization rate of 3% per annum on pre-shipment and post-shipment rupee export credit.
2. Eligibility: Initially, merchant exporters were not covered under this scheme. However, amendments have been made to include them, with the government reserving rights for further modifications.
3. Implementation: The Reserve Bank of India (RBI) implements the scheme through public and non-public sector banks, ensuring the benefit is passed on to exporters by banks, which is then reimbursed by RBI.
4. Recent Extensions: The scheme has been extended until March 31, 2024, or until further review, offering a 2% interest equalization benefit to merchant and manufacturer exporters of 410 identified tariff lines and 3% to all MSME manufacturer exporters. It is now fund-limited with benefits capped at Rs 10 Cr per annum per Import Export Code (IEC).
The Interest Equalisation Scheme's extension and additional allocation underscore the government's commitment to bolstering exports, particularly from labor-intensive sectors and MSMEs. By making export credit more affordable, the scheme is expected to enhance export growth and contribute to job creation across the country, aligning with the broader objectives of economic development and stability.
1. Providing detailed insights into the scheme's benefits, eligibility criteria, and application process.
2. Offering guidance on completing application forms accurately and compiling the necessary documentation
3. Helping with the submission process and ensuring that applications meet all the required criteria, thus increasing the chances of approval.
4. Assisting in financial planning and management to ensure that the benefits of the scheme are fully realized.
Interlink Capital can act as a crucial facilitator for exporters and MSMEs aiming to benefit from the Interest Equalisation Scheme. By providing expert advice, application support, and financial planning assistance, we can help businesses navigate the complexities of the scheme, ensuring that they are well-positioned to boost their exports and contribute to economic growth.
Exporters need to apply through the DGFT portal by submitting the required documentation. A Unique IES Identification Number (UIN) will be generated automatically which is required to be submitted to the concerned bank when availing Interest Equalisation against their pre and post-shipment rupee export credit applications
Initially, the scheme was available to manufacturer exporters but was later extended to include merchant exporters of 410 identified tariff lines at the 4-digit level and all MSME manufacturer exporters, subject to certain conditions and limitations.
Interlink Capital assists businesses in accurately completing the application process, compiling necessary documentation, and submitting applications to the DGFT, ensuring compliance with the scheme's requirements.
Yes, part of Interlink Capital's services includes providing tailored financial advice to ensure that the benefits of the Interest Equalisation Scheme are maximized, helping exporters plan their finances and investments effectively.