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Cabinet approves Additional allocation of Rs 2500 crore for continuation of Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit till 30.06.2024

Newdelhi:8/12/23:The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved an additional allocation of Rs 2500 Cr for continuation of Interest Equalisation Scheme till 30th June 2024. This would help exporters from identified sectors and all MSME manufacturer exporters to avail pre and post shipment Rupee export credit at competitive rates.

Details:

Benefit shall be continued till 30.06.2024 to manufacturer and merchant exporters of the identified 410 tariff lines and to all manufacturer exporters from MSME sectors at rates as specified below:

S.No. Category of Exporters Rate of interest Equalisation
1 Manufacturer and Merchant Exporters exporting products listed in the 410 tariff lines 2%
2 MSME exporters of all tariff lines 3%

 

Implementation strategy and targets:

The scheme shall be implemented by RBI through various Public and non-Public Sector banks who provide pre and post shipment credit to the exporters. The Scheme is jointly monitored by DGFT and RBI through a consultative mechanism.

Impact:

Availability of pre and post shipment packing credit at competitive rates is important for the exports sector in order to compete internationally. The effect of Interest Equalisation Scheme has been beneficial for the exports growth of the country as per the study conducted by IIM Kashipur. MSME sector is vital for employment generation. The scheme is primarily meant for the labour intensive sectors. The present proposal is meant for exports by merchants and manufacturer exporters of identified tariff lines and MSME Sector manufacturer exporters. Increase in exports from these employment intensive sectors and MSMEs would lead to generation of employment in the country.

Financial Implications:

The additional outlay of Rs 2500 Crore, over and above the current outlay of Rs 9538 Cr under the Scheme, is made available to bridge the funding gap to continue the Scheme upto 30.06.2024. The estimated annual expenditure under the Scheme is approximately Rs 2500 Crore.

Benefits:

The intented target beneficiaries include all MSME manufacturer exporters and non-MSME exporters of certain identified sectors belonging to 410 tariff lines at four digit level.

Details and progress of scheme if already running:

The figure of disbursement of amounts under the scheme for the last 3 years are as follow:

S.No. Financial Year Budget Allocated

(in Crores)

Actual Expenditure

(in Crores)

1 2021-22 3488 3488 (including arrears)
2 2022-23 3118 3118
3 2023-24 2932 2641.28(as on 30.11.2023)

Background:

Government of India had announced the Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit to eligible exporters.  The Scheme started on April1, 2015 and was initially valid for 5 years upto 31.3.2020.  The Scheme has been continued thereafter, including one year extension during COVID, and with further extensions and fund allocations.  Currently the Scheme provides an interest equalisation benefit at the rate of 2% on pre and post shipment Rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines at 4 digit level and 3% to all MSME manufacturer exporters. The Scheme was not fund limited and extended the benefit without any limit to all exporters. The Scheme has now been made fund limited, and benefit to individual exporters has been capped at Rs 10 Cr per annum per IEC (Import Export Code). In addition, the banks that lend to exporters at an average rate of more than Repo + 4% would be debarred under the Scheme.

 

About Editor in chief

Ashok Palit has completed his graduation from Upendranath College Soro, Balasore and post graduation from Utkal University in Odia Language and literture.. He has also carved out a niche for himself as a scribe of eminence after joining the profession in 1988. He is also an independent media production professional. He brings loads of experience to Advanced Media, Ashok Palit as a cineaste has been active in film criticism for over three decades. As a film society activist, he soared to eminence for his profound commitment to the art film appreciation and aesthetics of cinema. His mode of discourse is often erudite but always lucid and comprehensible marked by a perfect acumen so rare in the field. A film aesthete with an immense fond of critical sensibilities, he wrote about growth and development of odia cinema in New Indian Express, The Times of India, The Hindustan Times, The Asian Age and Screen. He has been working as an Editor for Cine Samaya from 2002-2004.. He had made solid contribution on cinema in many odia Dailies and weekly such as Samaj, Prajatantra, Dharatri, Samaya, Satabadi, and weekly Samaya.
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