Parliamentary Panel Calls for Extension of Interest Equalisation Scheme Amid Export Promotion Transition

A Parliamentary panel report urges the extension of the Interest Equalisation Scheme until the Export Promotion Mission becomes operational, highlighting the need to support Indian exporters against high costs. The mission, with a Rs 2,250 crore budget, is still in development, causing potential challenges for Indian exporters.

A Parliamentary panel has called for the extension of the Interest Equalisation Scheme until the Export Promotion Mission (EPM) is operational, citing potential adverse effects on Indian exporters. The decision to merge the scheme with EPM has raised concerns amongst exporters who heavily rely on it to mitigate high export credit costs.

Budgeted at Rs 2,250 crore, the EPM is designed to consolidate multiple components under a single umbrella, collaborating with the Finance and MSME Ministries. The Commerce Department indicated that once approved by the cabinet, additional funding would be sourced from the Department of Expenditure.

The Committee highlighted the high logistical and financial costs facing Indian exporters, compared to their international counterparts. With the repo rate at 6.25%, export interest rates soar between 8% and 12%, challenging the competitiveness of Indian goods abroad. Negotiations for Free Trade Agreements (FTAs) with several countries are ongoing to address these disparities.

(With inputs from agencies.)