Chinese cargo vessel 'San Fernando' arrives at the Vizhinjam international sea port, marking the first container ship's arrival at the newly-built port, in Thiruvananthapuram.
Credit: PTI File Photo
New Delhi: The Federation of Indian Export Organisations (FIEO) has urged the government to extend interest equalisation scheme or subsidy on loan for exports, which is slated to come to an end on September 30 after multiple extensions, by another 5 years in order to provide support to exporters who are struggling due to ongoing geo-political conflicts and subdued global demands.
Talking to reporters on the sidelines of an event FIEO Director General Ajay Sahai said some Indian exporters may not be able to service their overseas shipment demands if interest subsidies are not provided. “If there is no interest equalisation scheme, then we will lose some markets and some orders,”
he said.
Sahai said the export body has requested the government for extension of the scheme. “The scheme will end on September 30. We have requested for it to be extended for five years,” he added.
The interest equalisation scheme was introduced in April 2015, initially for five years. However, it has been extended multiple times. With effect from April 1, 2015 interest equalisation at 3% for labour intensive / MSME sectors was introduced. The rate was increased to 5% for MSME sectors with effect from November 2, 2018 and merchant exporters were covered under the scheme with effect from January 2, 2019.
Scheme seeks to remove cost disability of Indian exports because of higher credit cost. At present, the bank rate in India is 6.5% whereas in Japan (0.10%), China (3.45%), South Korea (3.5%), and Singapore (3.42%). Credit cost in India is generally 5-6% higher when compared with the other major exporting countries.
FIEO President Ashwani Kumar said another major challenge facing the Indian exporters is increased transportation cost due to the
ongoing disruptions in the Red Sea.
Meanwhile, FIEO signed an agreement with trade financing firm Stenn for supporting small and medium-sized businesses engaged in international trade.
“Our collaboration with FIEO represents a strong commitment to helping Indian exporters expand their global presence,” said Noel Hillman, Chief Commercial Officer of Stenn.
“By providing flexible financing solutions and mitigating payment risks, we empower businesses to scale rapidly and compete effectively with larger players,” he added.