The Directorate General of Foreign Trade (DGFT) has taken a significant step to bolster India's export sector by issuing comprehensive operational guidelines for the revamped Interest Equalisation Scheme, commonly known as the Interest Subvention Scheme. This move provides much-needed clarity and a procedural roadmap for Micro, Small, and Medium Enterprise (MSME) exporters and manufacturers seeking financial support.
Key Features and Eligibility Criteria of the Scheme
The scheme, which is effective for a period of two years until June 30, 2024, is designed to make Indian exports more competitive in the global market. It offers financial relief by subsidising the interest burden on pre- and post-shipment rupee export credit. According to the detailed guidelines, MSME exporters will receive a benefit of 3% across all 410 tariff lines classified under the ITC (HS) schedule. Furthermore, manufacturer exporters, both within and outside the MSME category, will be eligible for a 2% benefit on exports of the 410 specified products.
The DGFT notification explicitly states that merchant exporters are excluded from the ambit of this scheme. The support is applicable to exports made from October 1, 2021, to June 30, 2024. To avail of the benefit, exporters must ensure their shipments are realised in Indian rupees within the stipulated period. The scheme is administered by the Reserve Bank of India (RBI) in collaboration with designated banks and financial institutions.
Operational Mechanism and Claim Process
The operational framework is streamlined for ease of access. The benefit will be provided directly by the lending banks to eligible exporters at the time of credit disbursement. Banks will subsequently claim reimbursement from the RBI based on the subsidies extended. This direct pass-through mechanism is intended to reduce procedural delays and ensure timely support reaches the exporters.
Exporters seeking to benefit from this scheme must approach their respective banks, which are required to follow the detailed guidelines issued by the RBI and DGFT. The notification underscores that the scheme's provisions are subject to the conditions laid down by the central bank, ensuring a regulated and transparent process.
Implications for India's Export Ambitions
This clarification from the DGFT is a critical intervention aimed at stabilising and boosting India's export economy, particularly for the MSME sector which is a major employment generator and contributor to the nation's GDP. By reducing the cost of credit, the government aims to enhance the price competitiveness of Indian goods in international markets. The focus on 410 specific tariff lines indicates a targeted approach to strengthen key product categories.
The scheme's continuation and clear operational details are expected to provide a predictable policy environment for exporters, enabling them to plan their orders and finances better. It aligns with the broader objectives of India's Foreign Trade Policy to achieve sustained export growth. Financial experts and industry bodies have largely welcomed this move, viewing it as a essential measure to counter global economic headwinds and support domestic manufacturers.
In conclusion, the DGFT's detailed notification on the Interest Equalisation Scheme demystifies the process for thousands of MSME and manufacturing exporters. By offering concrete interest subvention of 2-3%, the government has delivered a tangible tool to mitigate financial pressures and fuel India's export engine. Eligible exporters are now advised to consult with their banking partners to immediately leverage this support mechanism for their overseas shipments.
