Budget 2025: Commerce Ministry may seek 5-year extension of interest equalisation scheme for exporters

The commerce ministry is expected to seek further extension of the interest equalisation scheme, which ended on December 31, 2024, in the upcoming Union Budget. The scheme, which was for pre- and post-shipment rupee export credit, helps exporters from various identified sectors and all MSME manufacturer exporters to avail of rupee export credit at competitive rates.

The ministry is likely to ask for an extension for another five years to promote exports in the country, PTI reported quoting an unnamed official.

Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2025 on February 1.

Under the scheme, launched in April 2015, exporters get subsidies for pre- and post-shipment rupee export credit. Exporters are demanding an extension of the scheme, saying it was helping them in the turbulent times.

The scheme was initially valid for only five years up to March 31, 2020, and was extended for one year during Covid-19 with further fund allocations. In September last year, the government extended the scheme till December 31, 2024.

The scheme earlier provided an interest equalisation benefit at the rate of 2% on pre- and post-shipment rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines (or product categories) at 4 digit level and 3% to all MSME manufacturer exporters. These sectors include handicrafts, leather, certain fabrics, carpets and readymade garments. Benefits to individual exporters were capped at ₹50 lakh crore per annum per IEC (Import Export Code).

The Reserve Bank of India implemented the scheme through various public and non-public sector banks in the country that provide pre- and post-shipment credit to the exporters. It is jointly monitored by the central bank and the Directorate General of Foreign Trade (DGFT) through a consultative mechanism.

The government disbursed ₹2,641.28 crore from April 2023 to November 30, 2024 against the allocated budget of ₹2,932 crore under the scheme. Furthermore, ₹3,118 crore was disbursed in 2022-23 and ₹3,488 crore in 2021-22.

Ashwani Kumar, President of the Federation of Indian Export Organisation (FIEO), said that the support measures under the scheme help in enhancing the competitiveness of Indian exporters in the international markets.

"In China, the rate of interest is 2-3% and that helps their exporters immensely. The government should positively consider extending the scheme," PTI quoted Kumar as saying.