AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYNo
Other export incentive
Effective 1 December 2008, the Reserve Bank of India (RBI) implemented an interest rate subvention scheme for export credit in designated sectors. The interest rate subvention takes the form of a lower interest rate ceiling for export credit.
In a more general export credit promotion scheme (see related measure), the RBI caps the interest rate on export credit at the Benchmark Prime Lending Rate (BPLR) minus 2.5 percentage points. Under the new scheme, designated sectors will receive a discount of up to 4.5 percentage points from the BPLR. However, the RBI demands that participants pay no less than 7 percent after the subvention.
The sectors eligible for the subvention are enumerated as:
- The scheme was initially announed for the period 1 December 2008 to 31 March 2009. On 25 March 2009, it was extended unchanged until 30 September 2009 and further until 31 March 2010 on 31 July 2009.
- The scheme was extended for the year 2010-11 on 23 April 2010 but the eligible sectors were reduced to Handicrafts, Carpets, Handlooms and Small and Medium Enterprises.
- On 11 October 2011, the scheme was further extended to the 4 sectors as above for the period 1 April 2010 to 31 March 2011.
- On 19 June 2012, the scheme was extended for the period 1 April 2011 to 31 March 2012 and 4 additional sectors have been included (see related state act).
- On 14 January 2013, the scheme was extended, with additional engineering goods eligible, for the period 1 April 2013 to 31 March 2014 (see related state act).
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