Skip to main content

Exporters to Receive 3% Interest Subsidy for 5 yrs

By
Falling exports likely to get a leg-up as CCEA clears Interest Equalisation Scheme on preand postshipment rupee export credit with effect from April 1
India's falling exports got a booster shot on Wednesday with the Cabinet Committee on Economic Affairs (CCEA) approving a scheme to provide cheaper credit to exporters for five years.
Prime Minister Narendra Modi-headed CCEA approved the Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on preand postshipment rupee export credit with effect from April 1, 2015, for five years. The scheme will be evaluated after three years.
This is the third major announcement for exports in the last fortnight. On October 30, the government expanded support to various products under the Merchandise Exports from India Scheme (MEIS), followed by a revision of the duty drawback rates for exporters two days ago.
“The rate of interest equalisation would be 3%. The scheme would be available to all exports of MSME and 416 tariff lines,“ said an official release, adding that “the scheme will help the identified export sectors to be internationally competitive and achieve higher level of export performance“.
The scheme covers labour intensive and employment generating sectors like auto components, processed agriculturefood items, handicrafts, handloom products, fabrics and leather goods.
Though the financial implication of the proposed scheme is estimated to be Rs.2,5002,700 crore per year, the actual effect will depend on the level of exports and claims iled by exporters with the banks.
The previous 3% interest subvention scheme was available up to March 31, 2015, for sectors including apparel, carpets, handlooms, sports goods, handicrafts, toys, and some engineering products. The rate offered under the scheme in 2013-14 was 2%.
The commerce department said it has funds worth Rs.1,625 crore under the nonPlan head that would be made available to RBI during 2015-16. The restructured scheme would be funded from Plan side from 2016-17 onwards.
“This is a very good move by the government and it is reassuring that the scheme is for a five-year period. This will improve the competitiveness of our exports. All kind of fiscal support has been given by the government and the only issue that remains to be addressed is of transaction costs,“ said Ajay Sahai, director-general, Federation of Indian Export Organisations.
India's exports declined for the 11th month running in October, highlighting the stiff competition faced by the country in a weak global economy.
As per data released earlier this week, exports fell 17.5% year-on-year in October at $21.35 billion and outward shipments declined in 20 out of the 30 industries, led by iron ore.
Sluggish global demand, an overvalued rupee, declining imports from China and devaluation of the Chinese currency have deterred India's exports from growing despite the commerce department expanding export incentive schemes for various products and markets.
Exports in the first seven months of the year were about $154.2 billion. In 2014-15, India's exports had totalled $310.5 billion.
Business Standard, New Delhi, 19th Nov. 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

By
  Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...
Post a Comment
Read more