The Union Cabinet on Wednesday approved Rs 600 crore incentive to exporters by way of 3% interest subsidy on pre and post-shipment bank credit aimed at making MSME exporters more competitive.
The export subsidy will be provided on products categories that are largely in MSME/ labour-intensive sectors such as agriculture, textiles, leather, handicraft and machinery, an official statement said after the Cabinet briefing.
The inclusion of merchant exporters in the scheme is expected to make them more competitive and also encourage them to export more products manufactured by MSMEs, adding to the country's exports. Additional exports by them will increase production by MSME giving a fillip to employment generation as MSME are generally in the employment-intensive sectors.
The present scheme, which is in force from 2015 for five years, provides interest equalisation rate of 3% on pre and post-shipment rupee credit to all manufacturing exporters exporting identified 416 four digit tariff lines and 5% on all merchandise products manufactured and exported by MSMEs. Merchant exporters were hitherto not covered under the scheme.
“Exporting community has been persistently demanding inclusion of the merchant exporters also in the ongoing scheme. Merchant exporters play an important role in finding overseas markets, getting export orders, communicating to MSME manufacturers the current preferences, trends and demand for products in international export markets,” the statement said.
The move will help in increasing country’s exports, said Ganesh Kumar Gupta, President, FIEO.
“Merchant exporters contribute to about 35% of the country’s exports and the high cost of credit equally blunts their competitive edge. The support is most timely as interest rates are moving northward in the country and the 3% subsidy will reduce their cost of operation significantly. This will help the MSME sector as most of the exports by the merchant exporters are in respect of products manufactured by MSME,” he said.
