The Synthetic & Rayon Textiles Export Promotion Council

Interest Equalisation Scheme on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years

The Synthetic & Rayon Textiles Export Promotion Council

 

Circular No.ES/40/2015-16                                                                        November 20, 2015                                                                                                                                                                

To: Members of the Council

Sub: Interest Equalisation Scheme on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years

Dear Sir,

We are glad to inform you that the Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years. The scheme will be evaluated after three years.

 

The features of the Interest Equalisation Scheme includes :

 

  • The rate of interest equalisation would be 3 percent. The scheme would be available to all exports of MSME and 416 tariff lines. Scheme would not be available to merchant exporters.

 

  • The duration of the scheme would be five years with effect from 1.4.2015.

 

  • The scheme would be funded from the funds available with Department of Commerce under non-plan during 2015-16 and the restructured scheme would be funded from plan side from 2016-17 onwards,

 

  • Ministry of Commerce & Industry may place funds in advance with RBI for requirement of one month and reimbursement can be made on a monthly basis through a revolving fund system,

 

  • On completion of three years of operation of the scheme, Department of Commerce may initiate a study on impact of the scheme on export promotion and its further continuation. The study may be done through one of the IIMs.

 

The operational instructions of the scheme would be issued by RBI.

Financial implication of the proposed scheme is estimated to be in the
range of Rs. 2500 crore to Rs. 2700 crore per year. However, the actual financial implication would depend on the level of exports and the claims filed by the exporters with the banks. Funds to the tune of Rs. 1625 crore under Non-plan Head of account are available under Demand of Grants for 2015-2016, which would be made available to RBI during 2015-16.

 

The scheme will help the identified export sectors to be internationally competitive and achieve higher level of export performance.

 

The scheme covers mostly labour intensive and employment generating sectors   like   processed   agriculture/food   items,  handicrafts,   handmade   carpet (including silk), handloom products, coir and coir manufactures, jute raw and yarn and other jute manufactures, readymade garments and made ups covered under Chapter 61-63, fabrics of all types, toys, sports goods, paper and stationary, Cosmetics and Toiletries, Leather Goods and footwear, Ceramics and Allied  Products, Glass and Glassware, Medical and Scientific Instruments, Optical Frames, Lenses, Sunglasses Etc., Auto Components/Parts, Bicycle & Parts, Articles of Iron or Steel (Notified lines), Misc. Articles of base metals (Notified lines), Industrial Machinery, Electrical and Engineering items, 1C Engine, Machine tools, Parts (Notified lines), Electrical Machinery and Equipment (Notified lines), Telecom Instruments (Notified lines) and all items manufactured by SMEs other than those covered above.

 

The list of 416 tariff lines is given below:

S.No.

Sector

Coverage

No of HS4 lines

1

Process agriculture/Food items

All lines

22

2

Handicraft

All lines

37

3

Carpet (Excl. Silk) Handmade

All lines

5

4

Handloom Products

All lines

2

5

Coir & Coir Manufactures

All lines

5

6

Jute Raw, Yarn

All lines

2

7

Other Jute Manufactures

All lines

1

8

Readymade Garments & Made ups(Ch 61-63)

All lines

42

9

Fabric of all types

All lines

33

10

Toys

All lines

1

11

Sports Goods

All lines

8

12

Paper, Stationary

All lines

8

13

Cosmetics and Toiletries

All lines

8

14

Leather Goods and footwear

All lines

7

15

Ceramics and Allied Products

All lines

12

16

Glass and Glassware

All lines

17

17

Medical and Scientific Instruments ,

All lines

15

18

Optical Frames, Lenses, Sunglasses Etc

All lines

4

19

Auto Components/Parts

All lines

6

20

Bicycle & Parts

All lines

3

21

Articles of Iron or Steel

Notified lines

20

22

Misc. Articles of base metals

Notified lines

10

23

 

Industrial Machinery, Electrical & Engineering items, 1C Engine, Machine tools, Parts

Notified lines

 

141

24

Electrical Machinery and Equipment

Notified lines

1

25

Telecom Instruments

Notified lines

6

26

All items manufactured by SMEs other than those covered above

All lines

 

  

Grand Total

 

416

 

Please be informed once again that the operation of scheme will start after the Reserve Bank of India (RBI) issues a notification in this regard. This Notification shall be issued in a few days.

Most of our MMF exporters are facing the problem of cost of credit which is important for textiles sector as they have to face stiff competition from the upcoming markets.

We therefore request our members to avail the benefit granted by the Government under the above Scheme in acquiring loans at subsidised rates to boost shipments as the country's overall exports are in the negative zone during the last six to nine months.

This is for your information and reference.

Thanking you,

 

V.ANIL KUMAR

EXECUTIVE DIRECTOR