IMPLEMENTATION LEVEL
NationalAFFECTED FLOW
Outflow (subsidised)ANNOUNCED AS TEMPORARY
YesNON-TRADE-RELATED RATIONALE
NoELIGIBLE FIRMS
allJUMBO
NoTARIFF PEAK
NoOther export incentive
On 18 November 2015, the Indian Cabinet Committee on Economic Affairs approved an Interest Equalisation Scheme (earlier known as the Interest Subvention Scheme) that essentially provides an interest rate subsidy on Pre & Post Shipment Rupee Export Credit. The rate of this subsidy will be 3% and has been provided retrospectively from 1 April 2015 for a period of 5 years. The subsidy is available to exports under 416 tariff lines (at the 4 digit level) and to all exports by micro, small & medium enterprises (MSMEs). The scheme is not available to merchant exporters.
To be eligible for subsidy under this scheme, the exported goods will have to meet the minimum criteria for processing of goods to be called as Originating from India and will be governed by the Rules of Origin provisions. According to the official press release, the scheme will have a financial implication of Rs.2500 to Rs. 2700 crore (appx. USD 370 to USD 400 million) annually.
The procedure for the implementation of the scheme was published by the Reserve Bank of India on 4 December 2015.
On 13 May 2020, the Reserve Bank of India notified that the scheme has been extended for an additional year i.e. from 1 April 2020 to 31 March 2021.
On 12 April 2021, the RBI announced an extension of the scheme until 30 June 2021.
On 1 July 2021, RBI extended the scheme until 30 September 2021.
On 8 March 2022, the scheme was extended for the period 1 October 2021 to 31 March 2024. Further, interest subsidy under 6 tariff lines relating to the telecommunications sector have been withdrawn for all exporters except MSME manufacturer exporters and the rate of interest subsidy has been reduced 2% for all exporters except MSME manufacturer exporters.
*USD to INR conversion is done at INR 67.15/USD