The Reserve Bank on Wednesday said a scheme providing interest subsidy for post and pre-shipment export credit has been extended by a year till March 31, 2021, a move which would provide relief to exporters.
Exporters get the subsidy under the 'Interest Equalisation Scheme for pre and post-shipment Rupee Export Credit'. The scheme ended on March 31 this year.
"...Government of India has approved the extension of Interest Equalisation Scheme for pre and post-shipment Rupee export credit, with same scope and coverage, for one more year i.e. upto March 31, 2021," the RBI said in a notification.
The extension shall take effect from April 1, 2020 and end on March 31, 2021, covering a period of one year, it added.
In November 2018, the interest subsidy was increased to 5 per cent from 3 per cent with an aim to boost MSME sector exports. Later, the government included other merchant exporters too under the scheme and allowed them interest equalisation at the rate of 3 per cent on credit for export of certain products.
Exporters had been demanding extension of the scheme, particularly at a time when they are facing huge problems due to the COVID-19 crisis.
Welcoming the decision, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said this is a huge relief to exporters as the cycle of exports has elongated with slowdown in demand and liquidity.
"The exporters have to borrow for longer period and therefore reduction in interest rate by 5 per cent to MSME manufacturers and 3 per cent for all in selected tariff line is very timely," he said. Council for Leather Exports (CLE) Chairman P R Aqeel Ahmed said the move will greatly help exporters to be competitive at this critical juncture.
India's exports dropped by a record 34.57 per cent to USD 21.41 billion in March, while it declined by 4.78 per cent to USD 314.31 billion for 2019-20.