FIEO Requests Govt To Extend Interest Equalisation Scheme

The Federation of Indian Export Organisations (FIEO) has urged the government to extend the interest equalisation scheme (IES) that is set to expire on June 30.

In a statement, the exporter’s body said that the extension is required to offer a lifeline to small exporters grappling with high interest rates and faltering exports.

“The scheme provides competitiveness to Indian exports, particularly to MSMEs, as the interest costs in India are much higher than in other countries,” FIEO added.

“The bank rate in India is 6.5 percent, whereas the bank rate in many of our Asian economies is around 3.5 percent,” the body stated.

“With a higher spread, the credit cost in India is generally over 5 to 6 percent as compared to such countries,” FIEO President also said.

He added that the scheme is more relevant now since exporters are looking for larger credit due to a huge increase in sea and air freight.

Ashwani Kumar further said that the interest subvention rates may also be enhanced from 3 percent to 5 percent for manufacturers and MSMEs, and from 2 percent to 3 percent for 410 tariff lines.

Banks provide loans to exporters at reduced interest rates through the IES, and the banks are then compensated by the government.

IES was launched to reduce stress among exporters, particularly in labour-intensive industries as well as micro, small and medium enterprises (MSMEs).