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Merchant exporters earlier excluded from the interest subvention scheme for exporters re-launched this fiscal are likely to be extended the benefit in a handful of sectors.
“Merchant exporters in sectors such as carpets, handicrafts and certain farm produce, where producers do not export on their own, are likely to be allowed to avail of the interest subvention scheme. The Directorate General of Foreign Trade (DGFT) is working on the details,” a government official told BusinessLine .
The interest subvention scheme (re-named interest equalisation scheme), which offers an interest subsidy of three per cent to exporters of a large variety of items, was announced in November for a period of five years beginning April 1, 2015.
The scheme covers 415 items spread across 25 sectors such as agriculture & food, auto-components, bicycle parts, handicrafts, electrical engineering items, readymade garments, handmade carpets, toys, sports goods and leather goods. It all includes all exports from micro small and medium enterprises (MSME).
“While the idea behind excluding merchant exporters from the scheme was to ensure that only genuine producers of export items benefit from it, a need has been felt to incentivise merchant exporters of items where producers do not directly export. That is the only way exports from these crucial sectors could get a push from the scheme,” the official said.
Sectors such as carpet weaving, handicrafts, handloom and a number of farm products are dominated by small players who have traditionally been exporting through merchant exporters.
“The DGFT is in talks with all stakeholders, including exporters and the Finance Ministry, to work out how the Cabinet note on the scheme is to be amended. We expect a decision on the matter soon,” the official said.
The interest subvention scheme was discontinued by the UPA government in its last year of rule and was re-introduced by the NDA government last November after long winding discussions between the Commerce and Finance Ministries over what to include and what to leave out.
The financial implications of the proposed scheme are estimated to be in the range of ₹2,500 crore to ₹2,700 crore annually, the actual implication would depend on the level of exports and the claims filed by the exporters with the banks.
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