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K. R.Srivats

New Delhi, June 20 Exports from employment-oriented export sectors have got another booster dose from the Government. The Centre has extended the 2 percentage point interest subvention facility to the rupee export credit provided by urban cooperative banks (UCBs) also.

Simply put, exporters in certain specified sectors will get rupee export credit from UCBs at a lower cost. The interest rate, however, will not be less than 7 per cent even after the 2 per cent subvention.

Hitherto, interest subvention facility was available to exporters only in respect of the export credit sanctioned by the scheduled commercial banks.

The Reserve Bank of India (RBI) has asked the UCBs to ensure that the entire 2 percentage point subvention is passed on completely to the eligible exporters. The seven specified sectors are textiles (including handloom), handicrafts, carpets, leather, gems and jewellery, marine products and small and medium enterprises.

“We had taken up this issue with the Commerce Minister in January and subsequently with the Finance Ministry also. Our submission was that the interest subvention should also be available in the case of export credit from urban cooperative banks”, Mr Ajai Sahai, Director-General of Federation of Indian Export Organisations (FIEO), told Business Line here.

In the interim Budget for 2009-10, the Finance Minister, Mr Pranab Mukherjee, had extended the validity of the 2 percentage point interest subvention facility on export credit availed from scheduled commercial banks, from March 31 till September 30, in respect of certain employment-oriented sectors. The interim Budget announcement is likely to result in an additional outgo of Rs 500 crore for the exchequer.

More Stories on : Exports & Imports | Co-operatives

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