Commerce Ministry Requests Extension of Export Credit Scheme Amid Global Challenges

The commerce ministry is pushing for an extension of the interest equalisation scheme on pre- and post-shipment rupee export credit, aiming to boost India's exports, an official stated on Wednesday. The scheme is set to expire this month.

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Commerce Secretary Sunil Barthwal mentioned that several schemes, including interest equalisation, are nearing completion and require renewal. Discussions with the department of expenditure are ongoing, he informed reporters.

Interest Equalisation Scheme Extension

Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi elaborated on the interest equalisation scheme, saying, "There is a proposal for extending it and we are hopeful that it should come through in the next one month or so." In June, the government extended the scheme for two months exclusively for MSMEs. Now, the commerce ministry seeks an extension for other exporters as well.

The scheme aids exporters from specific sectors and all MSME manufacturer exporters by offering rupee export credit at competitive rates during global economic challenges. Exporters receive subsidies under the Interest Equalisation Scheme for both pre- and post-shipment rupee export credit.

Scheme Implementation and Monitoring

Implemented by the RBI through various public and private sector banks, the scheme provides pre- and post-shipment credit to exporters. It is jointly monitored by the Directorate General of Foreign Trade (DGFT) and RBI through a consultative mechanism. The scheme began on April 1, 2015, initially valid for five years until March 31, 2020. It continued with extensions, including a one-year extension during COVID-19.

From April 2023 to November 30, 2024, Rs 2,641.28 crore has been disbursed against an allocated budget of Rs 2,932 crore under the scheme. In previous years, Rs 3,118 crore was disbursed in 2022-23 and Rs 3,488 crore in 2021-22.

Review of RoDTEP Scheme

On reviewing the Remission of Duties and Taxes on Export Products (RoDTEP), Sarangi said it is valid until September. "We will do a review in the meantime. The review takes place under the chairmanship of the finance secretary," he added.

The interest equalisation scheme is fund-limited with benefits capped at Rs 10 crore per annum per Import Export Code (IEC). The scheme's continuation aims to support exporters amid global economic headwinds by providing them with competitive credit rates.

The commerce ministry's efforts to extend this scheme reflect its commitment to supporting India's export sector during challenging times.