Circular No.ES/338/2018-19 January 05, 2019
To: Members of the Council
Sub.: Cabinet allows inclusion of merchant exporters under Interest Equalisation Scheme (IES) for Pre and Post Shipment Rupee Export Credit
We are glad to inform you that the long-standing demand of SRTEPC for inclusion of Merchant Exporters under the Interest Equalisation Scheme (IES) for availment of Pre and Post Shipment Rupee Export Credit at lower rates has finally been approved by the Hon'ble Prime Minister, Shri Narendra Modi on 2nd January, 2019 in New Delhi. Accordingly, now merchant exporters will be allowed interest equalisation rate of 3% on credit for export of products covered under 416 tariff lines identified under the scheme. The products covered under the Scheme are largely in MSME/ labour intensive sectors such as Agriculture, Textiles, Leather, Handicraft, machinery, etc.
The proposal will entail benefits of around Rs 600 crore to exporters on interest equalisation, for the remaining period of the scheme.
As you are aware, the Interest Equalisation Scheme (IES) announced on 1st April, 2015 for a period of five years, provided interest equalization rate of 3% on Pre and Post Shipment Rupee Credit for all manufacturing exporters exporting identified 416 four digit tariff lines and 5% on all merchandise products manufactured and exported by MSMEs. Merchant exporters were not covered under the scheme.
Support given to Merchant exporters by including them in the ambit of the scheme is expected to make them more competitive, encouraging them to export more products manufactured by MSMEs adding to country's exports. Additional exports by them will increase production by MSME giving a fillip to employment generation as MSME are generally in the employment intensive sectors.
Merchant exporters play an important role in finding overseas markets, getting export orders, communicating to MSME manufacturers the current preferences, trends and demand for products in international export markets. Merchant exporters also play a pivotal role in exports of MSME manufacturers as MSME manufacturers export significant quantity of products through merchant exporters. High cost of credit equally impact their competitiveness also as they factor the high interest costs in their export costing.
Shri Sri Narain Aggarwal, Chairman, SRTEPC thanks the Hon’ble Prime Minister, Shri Narendra Modi; Hon’ble Union Minister of Commerce and Industry, Shri Suresh Prabhu; & Hon’ble Textiles Minister, Smt. Smriti Zubin Irani for their kind recommendation and support in the matter.
For more details you may kindly refer to the Press Release dated 2nd January, 2019 issued by the Ministry of Commerce & Industry.
Members may kindly make a note of the same.