Budget 2024-25: Extension of export credit scheme expected to boost India's competitiveness|Report

Extension of Export Credit Scheme Expected in Upcoming Budget

The government is likely to extend a crucial support scheme for export credit to boost the competitiveness of the country's export sector, reports the Economic Times. This move comes in response to challenges posed b slowdowns in developed countries.

The upcoming budget is expected to extend the scheme for pre- and post-shipment rupee export credit by five years. The Ministry of Commerce and Industry has proposed continuing the interest equalisation scheme beyond its current sunset date of June 30. Under this scheme, micro, small, and medium enterprises (MSMEs) in manufacturing receive a 3% benefit, while exporters of 410 identified tariff lines receive a 2% incentive.

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An official aware of the matter told ET that while there may be some minor adjustments, the overall framework of the scheme will remain unchanged. The final decision on the proposal will be made by the Finance Ministry. Since 2021-22, the government has allocated Rs 9,538 crore to the scheme, with an additional ₹2,500 crore allocated in December last year.

The scheme allows exporters to access bank credit at subsidized interest rates, capped at Rs s10 crore annually per import-export code. Banks provide the subsidy initially and are later reimbursed by the government. This arrangement helps exporters reduce their cost of credit, thereby enhancing their competitiveness in global markets.