'Interest subsidy to boost exports from SMEs'
Deepak Kumar | The Dollar Business
Welcoming the announcement of 3% interest subsidy scheme, export bodies on Thursday said the move will encourage small-scale enterprises and revive the country’s foreign trade which has been on downward track for the past one year. Taking note of the shrinking exports, now for the eleventh month in a row, the government on Wednesday announced a 3% interest subsidy scheme for a period of five years for exporters – an initiative that is expected to cost the government about Rs. 2500 crore - 2,700 crore. “The decision to give benefit for 5 years is most welcome as it helps exporters to plan their decisions during the course of the present foreign trade policy. It will provide some relief to exporters who are in distress especially those in SME sector,” said T S Bhasin, Chairman of the Engineering Export Promotion Council (EEPC) India. Last month, India's outbound shipments fell by 17.53% to $21.35 billion due to a weak global demand. Several other reasons, including non-implementation of the interest subvention scheme, were attributed by the exporters for a continuous decline in India’s exports. The interest subvention scheme, now re-named as interest equalisation scheme, was given a green signal by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday and is effective on all transaction made on or after April 1, 2015. The scheme is applicable on all exports of Micro, Small and Medium Enterprises (MSME) and 416 tariff lines. According to Federation of Indian Export Organisations (FIEO) President S C Ralhan, the interest subsidy will encourage both exporters and industries to explore foreign market and strategize their marketing activities. “We really welcome the step. More importantly, the announcement of a 3% interest scheme gives a signal to the exporters that the government is now concerned over falling exports. The scheme has been announced for five years; it has never happened before. Now exporters can plan their specific market and accordingly their marketing strategies,” Ralhan told The Dollar Business. Exporters have been waiting for the implementation of the interest subvention scheme since April 2015. Now the scheme would enable small scale sectors to avail loans from banks at a 3% reduced rate. Ralhan said there are still some policy gaps that need to be filled. He, however, expressed confidence that the government has given a positive signal and other issues will be worked out slowly. Bhasin also expressed hope that some of the anomalies in the recently announced drawback rates would be corrected to benefit the job oriented engineering sector.
November 19, 2015 | 5:24pm IST.