Extension of Interest Equalisation Scheme

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Context

• The Department of Commerce has extended the Interest Equalisation Scheme for pre- and post-shipment rupee export credit for Micro, Small, and Medium-scale (MSME) exporters till August 31.
• This extension aims to support MSME exporters, particularly in the garment sector, by alleviating high interest costs.

Recent Extension Details

• Scheme Duration: Extended till August 31, with an allocated outlay of ₹750 crore.
• Beneficiaries: Limited to MSME exporters; non-MSME exporters are excluded from the extension beyond June 30.
• Terms: The existing terms of the scheme remain unchanged during the extended period.

Industry Impact

• Garment Sector: Beneficial for labor-intensive garment exporters, predominantly comprising MSME units.
• Challenges: Addressing high interest costs faced by exporters in the current economic environment.

Stakeholder Perspectives

• Apparel Export Promotion Council (AEPC): Welcomes the extension as crucial for supporting MSMEs in the garment sector.
• Call for Stability: Advocates for stable and predictable policy regimes, suggesting longer-term policy durations to enhance effectiveness.

Conclusion

• The extension of the Interest Equalisation Scheme underscores government efforts to bolster MSME exporters amidst economic challenges, particularly in sectors like garment manufacturing.
• Stakeholders emphasize the need for sustained policy stability to foster long-term growth and competitiveness in export markets.

ALL ABOUT INTEREST EQUALISATION SCHEME: https://iasgyan.in/daily-current-affairs/interest-equalisation-scheme

PRACTICE QUESTION Q. Explain the objectives and impact of the Interest Equalisation Scheme on Micro, Small, and Medium-scale (MSME) exporters in India. How does this scheme contribute to enhancing their competitiveness in global markets?

SOURCE: THE HINDU