📊 Economy & Trade

💼 India’s Interest Equalisation Scheme – A Lifeline for Exporters Amid Global Uncertainty

As global economic headwinds persist, the Indian Commerce Ministry is pushing for a further extension of the Interest Equalisation Scheme (IES) in the upcoming Union Budget.
This crucial initiative provides financial relief to exporters, helping them remain competitive in international markets.

With the scheme nearing its expiration, exporters and policymakers alike are calling for its continued support.

🧾 Background of the Scheme

• Launched: April 1, 2015
• Objective: Reduce the cost of rupee export credit for Indian exporters.
• Coverage:
  • Pre-shipment and post-shipment credit in rupees
  • Originally valid for 5 years, extended multiple times
  • Played a key role during the COVID-19 pandemic to cushion exporters

📅 Current Status

• Set to end: December 31, 2024
• Disbursed: ₹2,641.28 crore
• Budget allocated (April 2023–November 2024): ₹2,932 crore
• The Ministry is now advocating for budgetary extension to keep the scheme active in 2025 and beyond.

💸 Financial Benefits

• Exporters receive a 2% interest equalisation benefit on rupee credit for 410 tariff lines
• MSME manufacturer exporters receive a higher 3% subsidy
• Cap for benefits per Import Export Code (IEC):
  • Raised to ₹50 lakh per annum
• This helps lower the cost of capital, making Indian goods more competitive abroad.

🏦 Implementation and Monitoring

• Administered by the Reserve Bank of India (RBI) via:
  • Public sector banks
  • Private banks
• Monitored jointly by:
  • Directorate General of Foreign Trade (DGFT)
  • RBI
• Ensures transparency and accountability in disbursements.

🌍 Impact on Export Sectors

• Key beneficiaries include:
  • Textiles
  • Handicrafts
  • Leather goods
• These sectors face tough competition from low-interest economies like China
• The scheme acts as a buffer, enabling Indian exporters to retain their market share

🔮 Future Prospects

• The Commerce Ministry plans to propose a formal extension in the Union Budget 2025.
• Federation of Indian Export Organisations (FIEO) supports the move, stressing: “IES is essential for maintaining export momentum in uncertain economic times.”

🧭 Policy Takeaway

In a world of fluctuating interest rates and shifting trade dynamics, the Interest Equalisation Scheme stands out as a stabilising policy tool.
Extending it could be pivotal to supporting India’s ambitious export targets and empowering MSMEs on the global stage.

📢 A competitive edge begins with affordable credit.