The Government has announced an extension of the Interest Equalization Scheme for pre and post-shipment rupee export credit until June 30, 2024, according to a notification by the Reserve Bank of India. Under this extension, Manufacturers and Merchant Exporters dealing with specified 410 HS lines will benefit from a 2 per cent interest equalization rate, while MSME manufacturers exporting under any HS line will receive a higher rate of 3 per cent.
The scheme, inaugurated on April 1, 2015, was originally slated for a five-year duration until March 31, 2020. However, it has since been extended multiple times, including a one-year extension amidst the Covid-19 pandemic, along with additional extensions and allocations of funds.
Additionally, starting from the financial year 2023-24, banks pricing loans covered under the scheme at an average interest rate higher than the Repo rate + 4 per cent will face specific restrictions. Another important modification involves the imposition of a cap on the annual net subvention amount. The annual net subvention amount has been capped at Rs 10 crore per Importer-Exporter Code (IEC) in a given financial year. This cap applies to all disbursements made from April 1, 2023, onwards.
Courtesy: business-standard.com
