What changed
The Government of India approved extending the Interest Equalisation Scheme for pre and post-shipment rupee export credit until March 31, 2024, effective from October 1, 2021. Telecom instruments (six HS lines) are removed from the scheme, except for MSME manufacturer exporters. Interest equalisation rates are now 3% for MSME manufacturer exporters across all HS lines and 2% for other manufacturer and merchant exporters under 410 HS lines. Beneficiaries availing any Production Linked Incentive (PLI) scheme are excluded from this scheme.
What it means for you
Banks must adjust their lending rates for eligible export credit by applying the revised subvention rates upfront from April 1, 2022. They need to provide transparent disclosure of interest rates, subvention, and net rates to exporters. For the period October 2021 to March 2022, banks must identify eligible exporters, credit accounts, and submit consolidated claims to RBI by April 30, 2022. From April 2022 onwards, claims must be submitted monthly within 15 days of month-end.
What you must do
- Identify eligible exporters for the period October 1, 2021 to March 31, 2022, credit their accounts with the equalisation amount, and submit sector-wise consolidated claims to RBI by April 30, 2022.
- From April 1, 2022, reduce interest rates upfront for eligible exporters as per revised rates (3% for MSME manufacturers, 2% for others) and submit monthly claims within 15 days of month-end.
- Ensure that while approving export credit, you disclose the prevailing interest rate, interest subvention, and net rate to each exporter.
- Verify that beneficiaries are not availing any PLI scheme benefits before extending the scheme's benefits.
- Exclude telecom instruments (six HS lines) from the scheme unless the exporter is an MSME manufacturer.
Who it affects
Scheduled Commercial Banks (excluding RRBs), Small Finance Banks, Primary (Urban) Cooperative Banks with AD Category-I license, EXIM Bank, Exporters availing rupee export credit
What are the revised interest equalisation rates under the extended scheme?
MSME manufacturer exporters get 3% on all HS lines; other manufacturer and merchant exporters get 2% on 410 HS lines (excluding six telecom HS lines).
Are exporters under PLI schemes eligible for this scheme?
No, the extended scheme explicitly excludes beneficiaries who are availing benefits under any Production Linked Incentive (PLI) scheme.
What is the deadline for banks to submit claims for the period October 2021 to March 2022?
Banks must submit sector-wise consolidated reimbursement claims to RBI by April 30, 2022.