The government is likely to bring back the interest equalisation scheme (IES), which ended December 31, to help MSME exporters tide over the fallout of US tariffs, Engineering Exports Promotion Council (EEPC) chairman Pankaj Chadha has said.
“The interest equalisation scheme may come back quickly because the government does not have the head room for fresh fiscal benefits for exporters. At a cost of Rs 1,800 crore, equalisation levy of 3 percent only for MSMEs for a three to five year period may return so that there is continuity,” Chadha told Moneycontrol.
EEPC India is a key advisory body backed by the commerce and industry ministry.
Launched in April 2015, the programme helps exportsers, especially MSMEs, to be globally competitive by extending bank loans on subsidised interest rates.
The government on September 30, 2024 extended the scheme for pre and post shipment rupee export credit for three months to December 31.
Fiscal benefits of each MSME, on aggregate basis, was restricted to Rs 50 lakh for 2024-25 till December 31.
Despite demands, the Budget did not re-introduce IES. Instead, an Export Promotion Mission (EPM) of Rs 2,250 crore for Indian exporters was put in place.
But with the US slapping steep tariffs on goods such as steel and aluminium and auto parts, the government is keen to bring back IES.
While Trump announced a 90-day pause on reciprocal tariffs for more than 75 countries, barring China, the steeper duties levied by US of 25 percent each on steel, aluminium, and auto parts remain in place. So does the baseline reciprocal duty of 10 percent on all goods entering US
According to an analysis by Emkay Global, when the 90-day pause expires, Indian exports to the US could drop by $30-33 billion (0.8-0.9 percent of the GDP) without adjusting for cross-country hits or responses.
According to the latest available data, merchandise exports during April-February of the previous fiscal year stood at $395.63 billion against $395.38 billion during the year-ago period. Goods imports came in at $656.68 billion, up from $621.19 billion in the previous year.
The commerce ministry will release the trade figures for March on April 15.
On April 9, commerce minister Piyush Goyal assured exporters the government will work to provide a conducive environment to enable them to successfully navigate the recent changes in the global trade environment.
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