In a move aimed at providing continued support to the export sector, the ministry of commerce and industry, through the Directorate General of Foreign Trade (DGFT), has announced an extension of the Interest Equalization Scheme (IES) for Pre and Post shipment Rupee Export Credit. Trade Notice No. 16/2024-2025, issued on August 31, 2024, confirms that the scheme, previously set to end on August 31, 2024, will now continue for an additional month, up to September 30, 2024.
The extension is specifically applicable to Micro, Small, and Medium Enterprises (MSME) involved in manufacturing exports. The terms and conditions of the IES remain unchanged from those stipulated in the existing scheme. This initiative underscores the government's commitment to supporting MSME exporters amid challenging global economic conditions.
Exporters and members of trade associations, including the Export Promotion Councils (EPCs) and the Federation of Indian Export Organisations (FIEO), are encouraged to refer to the guidelines issued by the Reserve Bank of India (RBI) for detailed information on the scheme. The relevant notifications from the RBI will provide further clarity on the operational framework of this extension.
The decision to extend the IES was made with the approval of the competent authority, aiming to enhance the competitiveness of Indian exporters by providing them with a lower cost of credit. This measure is expected to contribute to the stabilization and growth of India's export sector, particularly in the MSME segment.
“For more information, stakeholders are advised to refer to official communications from the DGFT and the RBI,” as per DGFT.
RBI in a notification on March 8, 2022 had stated that the government has approved the extension of IES for Pre and Post Shipment Rupee Export Credit up to March 31, 2024 or till further review, whichever is earlier.
The apex bank also has interest equalisation rates under the scheme to 3 per cent for MSME exporters and 2 per cent for manufacturer exporters and merchant exporters.
Initially, IES offered a 3 per cent rate of interest equalisation for manufacturer exporters. Subsequently, the interest equalisation rate was increased from 3 per cent to 5 per cent in respect of exports by manufacturers of the MSME sector with effect from November 2, 2018. The scheme was also extended to merchant exporters who could avail the benefit at the rate of 3 per cent for all exports under 416 tariff lines with effect from January 2, 2019.
The IES or interest subvention for the exports was implemented by the Directorate General of Foreign Trade (DGFT) from April 1, 2015 while operational guidelines to the banks were issued by the RBI. The scheme was valid for a period of five years i.e. till April 1, 2020.
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