The interest Equalisation Scheme (IES) for pre and post shipment rupee export credit is being implemented by Directorate (DGFT) through commercial banks.The scheme came into effect from 01.04.2015 and is for a period of 5 years.(The scheme was earlier called as ‘interest subvention scheme’ which was existing for the period from August 2010 to 31.03.2015).
Reserve Bank vide its circular no. RBI/2018-19/81/DBR.Dir.BC.No.09/04.02.001/2018-19 dated November 29, 2018 announced that with effect from November 02, 2018 Interest Equalisation rate from 3% to 5% in respect of exports by the Micro, Small & Medium Enterprises (MSME) sector manufacturers under the Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit. According to the above said circular benefit of the scheme be provided to all eligible MSME Exporters.W.e.f January 2,2019 merchant exporters also have been included under the scheme for export of products covered under 416 tariff lines identified under the scheme.
The scheme is beneficial to labour intensive and employment generating manufacturing sectors like sectors such as textiles, engineering and leather who do exports of their goods. The manufacturing activities like processed agriculture/food items, handicrafts, handmade carpet (including silk), handloom products, coir and coir manufactures jute raw and yarn, readymade garments, Fabrics of all types, toys, sports goods, paper and stationary, cosmetics, toiletries, leather goods and footwear, ceramics, glass and glassware, medical and scientific instruments, optical frames, lenses, sunglasses, auto components industrial machinery, electrical and engineering items, etc. manufactured by SMEs are covered under the scheme.
The Scheme is available to all exports under 416 tariff lines under Indian Trade Clarification (ITC)- Harmonized System (HS) Codes of 4 digits and exports made by MSMEs across all ITC(HS) codes. It is therefore, advised that the benefit of the scheme be provided to all eligible MSME Exporters. The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue during the period of scheme in force.
Procedure for passing on the benefit of interest equalisation to exporters: Banks are required to reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India. The consolidated monthly reimbursement claims along with an External Auditor’s Certificate (with stamp and membership number) certifying that the claim for interest equalization amount shall be submitted to the Chief General Manager, Department of Banking Regulation, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort Mumbai – 400 001. The reimbursement of interest equalisation claim will be made by RBI as and when the funds are received from Government of India.