Context:
The Department of Commerce has extended the Interest Equalisation Scheme for pre- and post-shipment rupee export credit for Micro, Small and Medium-scale (MSME) exporters till August 31.
Relevance:
GS III: Indian Economy
About Interest Equalisation Scheme:
- Implementation Date:
- The scheme was first implemented on 1st April 2015 to provide pre- and post-shipment export credit to exporters in rupees.
- Validity:
- Initially valid for 5 years up to 31st March 2020. It has been continued thereafter, including extensions during the COVID-19 pandemic and further fund allocations.
- Implementing Agency:
- The scheme is implemented by the RBI through various public and non-public sector banks that provide pre- and post-shipment credit to exporters.
- Monitoring:
- Jointly monitored by the Directorate General of Foreign Trade (DGFT) and the RBI through a consultative mechanism.
- Objective:
- The scheme aims to help identified export sectors be internationally competitive and achieve a high level of export performance.
- Features:
- Eligibility Certification: An eligible exporter must submit certification from an external auditor to the concerned bank to claim this benefit.
- IES Benefits: Banks provide IES benefits to eligible exporters and claim reimbursement from the RBI based on the external auditor certification provided by the exporter.
- Interest Equalisation Benefit: The scheme offers an interest equalisation benefit at a rate of 2% on pre- and post-shipment rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines at the 4-digit level, and 3% to all MSME manufacturer exporters.
- Fund Limitation: The scheme is now fund-limited, with the benefit to individual exporters capped at Rs 10 Crore per annum per IEC (Import Export Code).
- Bank Rate Cap: Banks lending to exporters at an average rate of more than Repo + 4% are debarred under the scheme.
-Source: The Hindu
