On May 13, 2020, In a bid to provide a considerable relief to the exporters, India’s central bank, the Reserve Bank of India (RBI) has extended the interest subsidy period by one year to 31 March 2021 on export credit received before and after shipment of goods to exporters.
- Exporters get the subsidy under the ‘Interest Equalisation Scheme for pre and post shipment Rupee Export Credit’, which was ended on March 31, 2020.
i.The extension shall take effect from April 01, 2020 and will remain in force for a year with the same size and coverage. The move comes after the exporters, who are facing huge problems due to the coronavirus (COVID-19) crisis, had been demanding extension of the scheme.
ii.Background: For the exporters of MSME units, the interest subsidy on loan before & after sending export goods has been increased to 5% from 3% by the RBI in November 2018. The exporters are assisted by the Government under the above said scheme, which was earlier known as Interest Subvention Scheme.
iii.India’s exports have been sharply declined by 34.57 % to $21.41 billion in March 2020, while it plunged by 4.78 % to $314.31 billion for 2019-20.
About ‘Interest Equalisation Scheme for pre and post shipment Rupee Export Credit’:
- The government announced the new scheme in November 2018 & this applies to all exports to the MSME sector and 416 tariff lines.
- It covers mostly labour intensive and employment generating sectors like processed agriculture/food items, handicrafts, readymade garments, glass and glassware, medical and scientific instruments, and auto components/parts, among others.
About Interest Subvention Scheme for MSMEs:
It aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform which helps in formalization of economy, while reducing the cost of credit.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).