The cabinet committee on economic affairs (CCEA) today approved the provision of additional funds, to the tune of Rs450 crore, to provide immediate relief to the exporters by way of providing interest subvention to mitigate hardships on account of global melt down.
Accordingly, pre- and post-shipment export credit for labour-intensive exports, i.e., textiles (including handlooms, carpets and handicrafts), leather, gems and jewellery, marine products and other products from the SME sector will be allowed an interest rebate of 2 per cent up to 31 March 2009.
Exporters will, however, have to pay a minimum rate of interest of 7 per cent per annum, a government press release said.
Since the interest subvention scheme, which was originally sanctioned for a total of Rs800 crore, has been extended up to March 2009, the present proposal approved by CCEA will provide for an additional Rs450 crore in interest rebate, the release said.
With this, the total financial support provided under interest subvention scheme, so far, will be Rs1,250 crore.
The government and the Reserve Bank of India have taken a number of steps to increase credit flows to productive sectors of the economy in the aftermath of the global financial market meltdown.
These included infusion of liquidity into the banking system, addressing the problem being faced by various non-bank financing companies, RBI lowering lending rates for banks to ensure liquidity to meet the expanded credit requirements of the economy in view the contraction in credit from non-bank sources, easing of access to external commercial borrowing, increase in plan expenditure etc, the release noted.