The government has extended the Interest Equalization Scheme (IES) for pre- and post-shipment credit by another month. The extension aims to provide continued financial relief to exporters, particularly in sectors facing global uncertainties and fluctuating demand. The scheme, which reduces the cost of borrowing for exporters by offering interest rate subsidies, was originally set to expire, but the government’s decision allows businesses to maintain cash flow at lower financing costs.
The IES offers a subsidy of 3% to Micro, Small, and Medium Enterprises (MSMEs) and 2% to other eligible exporters on interest rates for loans. This initiative has been crucial in helping Indian exporters remain competitive in international markets by easing the financial burden of high interest rates. The scheme has played a vital role in promoting exports, particularly from sectors such as textiles, leather, agriculture, and engineering goods, which rely heavily on external markets.
Exporters welcomed the government’s decision, citing the ongoing challenges posed by global economic volatility, rising input costs, and disruptions in supply chains. Many businesses, especially MSMEs, have struggled to maintain profitability amid rising inflation and currency fluctuations. The IES extension provides temporary relief and is expected to stabilize operations for exporters facing tight margins.
Industry experts have called for a longer-term extension and a more comprehensive review of the scheme to better align with the evolving needs of exporters. They argue that consistent support is necessary to boost India’s exports in the long term, especially as the country strives to expand its presence in global markets.
The extension of the Interest Equalization Scheme reflects the government’s commitment to sustaining export growth amid global challenges. As India continues to strengthen its export infrastructure, the scheme will remain a critical tool for supporting the financial health and global competitiveness of its exporters.