Government Set to Extend Export Credit Support Scheme Amid Global Economic Challenges

Government plans to extend crucial export credit support scheme to enhance competitiveness amid global economic slowdowns.

In a strategic move aimed at bolstering the competitiveness of India’s export sector amidst global economic headwinds, the government is poised to extend a crucial support scheme for export credit. Reports from the Economic Times indicate that this initiative comes as a response to slowdowns observed in developed countries, impacting export dynamics.

The upcoming budget is expected to include provisions for extending the scheme for pre- and post-shipment rupee export credit by an additional five years. The Ministry of Commerce and Industry has proposed the continuation of the interest equalisation scheme, which is currently scheduled to expire on June 30. This scheme provides significant benefits to exporters, particularly micro, small, and medium enterprises (MSMEs) in manufacturing sectors, who receive a 3% interest rate subsidy. Additionally, exporters of 410 identified tariff lines enjoy a 2% incentive under the scheme.

According to sources familiar with the matter cited by ET, while there may be some minor adjustments, the fundamental framework of the scheme will largely remain unchanged. The final decision on this proposal will be made by the Finance Ministry, reflecting ongoing efforts to sustain and enhance India’s export competitiveness.

Since the fiscal year 2021-22, the government has allocated Rs 9,538 crore to support this scheme, with an additional allocation of ₹2,500 crore made in December last year to further bolster export credit facilities.

Under the current setup, the scheme enables exporters to access bank credit at subsidized interest rates, capped at Rs 10 crore annually per import-export code. Banks initially provide the subsidy, which is later reimbursed by the government. This mechanism effectively lowers the cost of credit for exporters, thereby empowering them to navigate global markets with increased competitiveness.

The extension of this scheme is expected to provide much-needed stability and support to Indian exporters, enabling them to overcome financial barriers and seize opportunities in challenging global trade environments. By reducing financial burdens and enhancing liquidity, the scheme aims to fortify India’s position as a key player in international trade and foster sustainable economic growth.

As global economic uncertainties persist, the government’s proactive measures in supporting export-oriented industries underscore its commitment to strengthening the resilience and vibrancy of India’s export ecosystem.

News Bureau
News Bureau
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