Interest equalisation scheme to boost Indian exports
The Central government has announced an interest equalisation scheme on pre and post shipment rupee export credit with effect from April 1, 2015 for five years to stem falling exports. According to an official press release, the rate of interest equalisation would be 3 per cent.
The scheme would be available to all exports made by small and medium scale enterprises across 416 tariff lines. Merchant exporters will not be eligible for the scheme. The scheme was earlier called Interest Subvention Scheme.
The operational instructions of the scheme would be issued by the RBI.
The scheme covers mostly labour intensive and employment generating sectors like processed agriculture/food items, handicrafts, handmade carpet (including silk), handloom products, coir and coir manufactures, jute raw and yarn, readymade garments etc. Fabrics of all types, toys, sports goods, paper and stationary, cosmetics and toiletries, leather goods and footwear, ceramics and allied products, glass and glassware are also included.
Medical and scientific instruments, optical frames, lenses, sunglasses, auto components industrial machinery, electrical and engineering items, manufactured by SMEs are also covered under the scheme.
The government expects the scheme to cost between Rs 2,500 crore to Rs 2,700 crore annually. The actual financial outgo, though, would depend on the level of exports and the claims filed by the exporters with the banks.
Funds to the tune of Rs 1,625 crore would be made available to RBI during 2015/16, the commerce ministry states.
The scheme will be evaluated after three years. While it will be funded from the funds available with Department of Commerce under non-plan head during 2015/16, the restructured scheme would be funded from plan side from 2016/17 onwards.
Textile units in Coimbatore have hailed the government's decision on pre and post shipment rupee export credit.
A Sakthivel, Regional Chairman of the Federation of Indian Export Organisations (FIEO), said the three per cent interest equalisation scheme for five years will help exporters plan for the long term and will encourage sectors such as textiles, engineering and leather.
Sakthivel who is also the President of the Tirupur Exporters Association (TEA) also said the scheme has come at an appropriate time when the apparel exports registered negative growth in August and September on a year-to-year basis.
South India Mills Association (SIMA) Deputy Chairman P Nataraj said the scheme for fabrics and made ups will make the industry competitive. The government has increased draw back rates, expanded the merchandise exports from India scheme and now brought in the interest equalisation scheme which will boost exports.
Prabhu Dhamodharan, Secretary, Indian Texpreneurs Federation said the timely support from the government will help the textile sector regain its export market share and move up the value chain. (SH)
Fibre2Fashion News Desk – India