11,000 exporters benefitted, under interest equalisation scheme

The government stated that around 11,000 exporters benefit from the interest equalisation scheme, which lowers credit costs for MSMEs. While India’s repo rate is 6.25%, exporters face interest rates of 8-12%, far higher than competitors in China, Malaysia, Thailand, and Vietnam. The scheme, previously covering all MSME exports, has been partially extended until December 2024 for manufacturer exporters with a Rs 50 lakh cap.

The government announced on Tuesday that around 11,000 exporters benefit from the interest equalisation scheme, which provides credit at concessional interest rates. Minister of State for Commerce and Industry Jitin Prasada, in a written reply to the Lok Sabha, highlighted that the scheme plays a crucial role in reducing the higher credit costs faced by Indian exporters, particularly MSMEs, compared to their global competitors.

India’s repo rate is approximately 6.25%, while exporters pay interest rates ranging from 8 to 12% or higher, depending on the borrower’s risk profile assessed by Authorised Dealer Banks. In contrast, competing nations have significantly lower central bank rates—3.1% in China, 3%in Malaysia, 2% in Thailand, and 4.5% in Vietnam.

“Approximately, 11,000 exporters avail the benefits under the scheme,” Prasada stated. Until June 30, MSME exports received a 3% interest equalisation, while 410 specified product categories were eligible for a 2% benefit. However, from July 1, 2024, the scheme has been partially extended until December 31, 2024, specifically for MSME manufacturer exporters, with a cap of Rs 50 lakh per exporter.

“Presently, Interest Equalisation has been merged under the Export Promotion Mission in which a budgetary allocation of Rs 2,250 crore has been made,” he added, noting that the government is actively consulting stakeholders on the mission. The initiative aims to facilitate easier access to export credit, provide cross-border factoring support, and help MSMEs navigate non-tariff measures in global markets.

In a separate response, Prasada reported that a cumulative Rs 13,029 crore has been disbursed under the PLI scheme until December 2024. The incentives cover nine sectors, including Large-Scale Electronics Manufacturing, IT Hardware, Bulk Drugs, Medical Devices, Pharmaceuticals, Telecom & Networking Products, Food Processing, White Goods, and Drones.