On July 1, 2021, The Reserve Bank of India (RBI) reported the Government of India’s(GoI) approval for the extension of the ‘Interest Equalization Scheme for Pre and Post Shipment Rupee Export Credit’ for 3 months, i.e., up to September 30, 2021.
- The extant operational instructions that are issued by RBI under the Scheme were also extended to remain in force up to September 30, 2021.
- Earlier in April 2021, the scheme was extended till June 30, 2021.
Background:
i.The scheme was started on April 1, 2015, to provide subsidies to exporters on interest provided on pre-and post-shipment export credit.
- It also enables all banks to identify the eligible exporters as per the scheme and credit their accounts with the eligible amount of interest equalisation (subsidy).
ii.Under the scheme, in November 2018, GoI increased the Interest Equalisation rate from 3 percent to 5 percent in respect of exports by the Micro, Small & Medium Enterprises (MSME) sector manufacturers and extended the benefit of the scheme to all eligible MSME Exporters.
iii.In January 2019, GoI included merchant exporters also under the scheme and allowed them for interest equalisation at the rate of 3 percent on credit for export of products covered under the Scheme.
iv.The Scheme is available to all exports under 416 tariff lines and exports made by MSMEs across all ITC(HS) codes.
v.The Federation of Indian Export Organisations (FIEO) stated the extension of interest equalisation to provide competitive rates for exports (particularly for MSMEs). It also requested the GoI to extend it for 3 more years.
vi.India’s merchandise exports increased by 69.35 percent to $32.27 billion in May, 2021 as compared with $19.05 billion in May, 2020.
Recent Related News:
India’s export of agriculture and allied products (including marine and plantation products) increased by 17.34% to USD 41.25 Billion during 2020-21 (in INR terms the increase was 22.62%). Exports during 2020-21 amounted to INR 3.05 lakh crore compared to INR 2.49 lakh crore during 2019-20.
About Reserve Bank of India(RBI):
i.Key Appointments in RBI – Appointments Committee of the Cabinet (ACC) headed by the Prime Minister appoints the governor and deputy governors of RBI.
ii.Section 7 in The RBI Act, 1934, empowers the government to issue directions to the RBI governor.
iii.Shaktikanta Das – The 25th governor of RBI from 11 December 2018
