Interest Equalisation Scheme

✦Key Features

• Provides interest equalisation at a specified rate (e.g., 2% or 3%) on export credit.
• Applicable for both pre-shipment and post-shipment Rupee export credit.
• Covers eligible products/sectors and all manufacturer exporters/merchant exporters as per scheme guidelines.
• Implemented through commercial banks, which pass on the benefit directly to exporters.
• The scheme is periodically reviewed, extended, and notified by DGFT and administered by RBI.

✓Eligibility Criteria

• All manufacturer exporters and merchant exporters of specified 410 HS lines.
• All MSME manufacturer exporters across all HS lines.
• Must avail pre-shipment and/or post-shipment Rupee export credit from scheduled commercial banks.
• Holding a valid Import-Export Code (IEC).

★Benefits

• Reduced cost of borrowing for export finance, improving profitability for exporters.
• Increased price competitiveness of Indian goods and services in international markets.
• Provides crucial support for the Micro, Small and Medium Enterprises (MSME) sector, a major contributor to exports and employment.
• Stimulation of overall export growth, leading to higher foreign exchange earnings and economic stability.

▶Application Process

• Exporters apply for pre-shipment/post-shipment Rupee export credit from their bank.
• Banks provide the credit at the reduced interest rate after factoring in the interest equalisation benefit.
• Banks then claim reimbursement of the interest equalisation amount from the Reserve Bank of India (RBI) through an online portal.
• Exporters ensure timely submission of all required documents to their bank and compliance with the scheme guidelines to avail benefits.

₹ Budget Allocation

2932

Funding Ratio (Centre:State): 100% Central Government (through RBI and DGFT)

Historical Context

Launched in April 2015 as the Interest Subsidy Scheme; rebranded and extended multiple times to support the 'Make in India' and 'Export' goals.

Challenges

• Budgetary constraints leading to delays in subvention disbursement by banks
• Limited awareness among micro-exporters regarding the claim process
• The temporary nature of extensions affecting long-term export planning
• Complexity in auditing interest claims by the RBI

Reforms & Recommendations

• Automatic and permanent institutionalization of the scheme to provide certainty
• Direct Benefit Transfer (DBT) of subvention to exporters' accounts to bypass bank delays
• Expanding the list of eligible tariff lines to include high-tech exports

Performance Statistics

SDG Linkages

Constitutional Backing

Technology Used

Success Stories

Key Takeaways

• Provides 3% subvention for MSME manufacturers
• Provides 2% subvention for 410 HS lines (Manufacturer & Merchant exporters)
• Implemented by RBI through commercial banks
• Focuses on Pre and Post shipment Rupee Export Credit

Convergence Schemes

• Remission of Duties and Taxes on Exported Products (RoDTEP)
• Market Access Initiative (MAI)
• PM Vishwakarma

Sector Tags