Government Extends Interest Equalisation Scheme for MSME Exporters Until December 2024

The Directorate General of Foreign Trade (DGFT) has announced a three-month extension of the Interest Equalisation Scheme (IES) for pre-and post-shipment rupee export credit, providing crucial support to MSME exporters. Initially set to expire on September 30, the scheme will now be effective until December 31, 2024.

This extension comes with a key restriction: MSME manufacturer exporters will have their fiscal benefits capped at Rs 50 lakhs for the financial year 2024-25 until December 2024. According to the trade notice, those MSMEs who have already reached or exceeded this benefit limit by September 30, 2024, will not be eligible for further benefits during the extended period.

The Interest Equalisation Scheme was launched in April 2015 to provide interest subvention for exporters, offering 2% equalisation on pre- and post-shipment rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines and 3% for MSME manufacturer exporters. The scheme had initially been extended until September 30, 2024, with claims for non-MSME exporters accepted until June 30, 2024.

Last month, the government introduced an interest subvention cap of Rs 5 crore per IEC (Import-Export Code) for MSME manufacturers, valid until September 30, 2024. This decision is aimed at rationalising the fiscal benefits under the scheme and ensuring broader access to credit for smaller exporters.

The extension of IES comes at a crucial time for MSMEs, particularly as the export share of MSME products has seen a recovery, climbing back to 45.73% in FY24 after several years of decline. This is a notable increase from the low of 43.59% in FY23.

Disclaimer: This article is intended for informational purposes only and does not constitute legal or financial advice. Please consult with financial experts for specific guidance related to the Interest Equalisation Scheme and MSME export benefits.