With a view to encourage exports, the Reserve Bank of India (RBI) today extended the 2 per cent interest subsidy scheme for exporters in segments like handicrafts, carpets, SMEs and certain engineering goods, by one year till March 2014.
The RBI’s notification said that it has been “decided to extend the 2 per cent Rupee Export Credit Interest Rate Subvention Scheme...w.e.f. April 1, 2013 to March 31, 2014”.
Other sectors which will be benefited from the extension of the scheme are, handlooms, readymade garments, processed agriculture products, sports goods, toys and 134 engineering good items (or tariff lines).
Under the scheme, banks would reduce the interest rate chargeable to exporters (as per Base Rate system) by the amount of subvention subject to a floor rate of 7 per cent.
Earlier also, the interest subvention scheme was extended till March 31, 2013 on pre and post shipment rupee export credit for certain employment orientated export sectors.
Recently, the government decided to widen the scheme to include certain goods from the engineering sector.
The RBI notification said the “banks may ensure to pass on the benefit of 2 per cent interest subvention completely to the eligible exporters”.
Exports are on decline for the past eight months. The contraction was 1.92 per cent in December 2012 to $24.8 billion.