The Synthetic & Rayon Textiles Export Promotion Council

Interest Equalisation Scheme on Pre & Post Shipment Rupee Export Credit

The Synthetic & Rayon Textiles Export Promotion Council

Circular No.ES/41/2015-16                                                                       December 8, 2015                                                                                                                              

To: Members of the Council

Sub: Interest Equalisation Scheme on Pre & Post Shipment Rupee Export Credit

Dear Sir,

We are glad to inform you that the much awaited Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit has been announced by the Government vide RBI Notification No. RBI/2015-16/259 dated December 4, 2015

The scheme is effective from April 1, 2015 for a period of 5 years.

The details of the scheme are as follows :

(a)  The rate of interest equalisation @ 3% per annum will be available on Pre Shipment Rupee Export Credit        and Post Shipment Rupee Export Credit.

(b)  The scheme would be applicable w.e.f 01.04.2015 for 5 years. Government, however, reserves the right         to modify/amend the Scheme at any time.

(c)  The scheme will be available to all exports under 416 tariff lines [at ITC (HS) code of 4 digit] including            Readymade Garments & Made ups(Ch 61-63) and Fabric of all types as per Annexure given and               exports made by Micro, Small & Medium Enterprises (MSMEs) across all ITC(HS) codes

   (d)  Scheme would not be available to merchant exporters.

  (e)  Banks are required to completely pass on the benefit of interest equalisation, as applicable, to the                 eligible exporters upfront and submit the claims to RBI for reimbursement, duly certified by the external          auditor.

   (f)  Ministry of Commerce and Industry will place funds in advance with RBI for a requirement of one month         and reimbursement would be made on a monthly basis through a revolving fund system.

               (g)  All eligible exports under the scheme would have to meet the criteria of minimum processing for the                          goods to be called as Originating from India and would be governed by provision of Paragraph 2.108                          (a) (Rules of Origin [Non preferential]) of Handbook of Procedures of Foreign Trade Policy 2015-2020

    (h) A study may be initiated on the impact of the scheme on export promotion on completion of 3 years of          the operation of the scheme. The study may be done through one of the IIMs.

                 (i)  RBI shall send a monthly report to Deptt of Commerce/DGFT indicating reimbursement made                                   commodity wise/bank wise, as per their prescribed format.

                 (j)   Accordingly, RBI has advised scheduled commercial banks to adhere to the following operational                             procedure for claiming reimbursement:

                           (A).  Procedure for passing on the benefit of interest equalisation to exporters:

         (B).  Procedure for claiming reimbursement of interest equalisation benefit already   
                passed on to eligible exporters

In context to the above Scheme, we are attaching herewith the following :

(1)  RBI Notification No. RBI/2015-16/259 dated December 4, 2015

(2)  Details of the Scheme

(3)  List of HS Lines from Chapter 54 to 63 (of MMF Textiles) covered under the Interest Equalisation Scheme on Pre       and Post Shipment Rupee Export Credit

Members are requested to go through the guidelines and follow the instructions given in the above Notification and do the needful.

Thanking you,

 

V.ANIL KUMAR

EXECUTIVE DIRECTOR

PS: Definition of MSME :- The Government of India has enacted the Micro, Small and Medium Enterprises                    Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is              provided as per RBI’s Master Circular - Lending to Micro, Small & Medium Enterprises (MSME) Sector vide              Notification No. RBI/2015-16/74 FIDD.MSME & NFS.BC.No.07/06.02.31/2015-16 dated July 1, 2015.