The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its approval to the proposal of the Department of Commerce for including merchant exporters under the Interest Equalisation Scheme (IES) for pre- and post-shipment rupee export credit.
Accordingly, they will be allowed interest equalisation rate of 3 per cent on such credit for export of products covered under 416 tariff lines identified under the scheme.
These products are largely in MSME/labour-intensive sectors such as agriculture, textiles, leather, handicraft, machinery, etc.
The decision will enable exporters to get benefits of around Rs600 crore on interest equalisation, for the remaining period of the scheme.
Inclusion of merchant exporters in the scheme is expected to make them more competitive, encouraging them to exports more products manufactured by MSMEs thereby increasing the country's exports. Additional exports by them will increase production by MSME giving a fillip to employment generation as MSME are generally in the employment intensive sectors.
The present scheme introduced on 1 April 2015 for a five-year period, provides interest equalisation rate of 3 per cent on pre- and post-shipment rupee credit to all manufacturing exporters exporting identified 416 four digit tariff lines and 5 per cent on all merchandise products manufactured and exported by MSMEs.
Merchant exporters were hitherto not covered under the scheme.
Exporting community has been persistently demanding inclusion of the merchant exporters also in the ongoing scheme. Merchant exporters play an important role in finding overseas markets, getting export orders, communicating to MSME manufacturers the current preferences, trends and demand for products in international export markets. Merchant exporters also play a pivotal role in exports of MSME manufacturers as MSME manufacturers export significant quantity of products through merchant exporters. High cost of credit equally impact their competitiveness also as they factor the high interest costs in their export costing.