India extends Interest Equalization Scheme for MSMEs by 1 month

03 Sep '24

1 min read

India extends Interest Equalization Scheme for MSMEs by 1 month

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Insights

India has extended the Interest Equalization Scheme for pre- and post-shipment rupee export credit for MSMEs by one month, beyond August 31, 2024.
This extension maintains the same terms and conditions, with a total outlay of ₹750 crore (~$89.9 million).
Exporters have requested an increase in subvention rates due to a significant rise in repo rates.

India has extended the Interest Equalization Scheme (IES) for pre- and post-shipment rupee export credit by one more month, beyond August 31, 2024. The scheme, initially set to expire on June 30, 2024, was first extended for two months.

According to Trade Notice No. 16/2024-2025 issued by the Directorate General of Foreign Trade (DGFT) on August 31, the extension is specifically for micro, small, and medium enterprises (MSMEs). All other terms and conditions remain unchanged. Previously, the scheme’s total outlay was capped at ₹750 crore (approximately $89.9 million), and this extension continues under the same terms.

Under the scheme, banks provide loans to exporters at a reduced interest rate, and the government compensates the lenders for the difference. Exporters have also called for an increase in the subvention rates from 3 per cent to 5 per cent due to a sharp rise in repo rates over the past two years.

Fibre2Fashion News Desk (KUL)

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