Interest Equalisation or Interest Subvention or Interest Subsidy (@3%) Scheme for Exporters on Pre & Post Shipment Rupee Export Credit
The interest equalisation scheme, i.e. 3% subsidy in interest rate, is valid for 5 years w.e.f. 1 April, 2015. The scheme applicable for all exports of MSME and 416 tariff lines except for merchant exporters.
The CCEA has given its approval on 18th November, 2015 for Interest Equalisation Scheme (earlier called Interest Subvention Scheme or Interest Subsidy Scheme for Exporters) on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years. The scheme will be evaluated after three years.
The following are the features of the Interest Equalisation Scheme / Interest Subvention Scheme:
(i) The rate of interest equalisation would be 3 percent. The scheme would be available to all exports of MSME and 416 tariff lines. Scheme would not be available to merchant exporters.
(ii) The duration of the scheme would be five years with effect from 1.4.2015.
(iii) The scheme would be funded from the funds available with Department of Commerce under non-plan during 2015-16 and the restructured scheme would be funded from plan side from 2016-17 onwards,
(iv) Ministry of Commerce & Industry may place funds in advance with RBI for requirement of one month and reimbursement can be made on a monthly basis through a revolving fund system,
(v) On completion of three years of operation of the scheme, Department of Commerce may initiate a study on impact of the scheme on export promotion and its further continuation. The study may be done through one of the IIMs.
The scheme will help the identified export sectors to be internationally competitive and achieve higher level of export performance. The scheme covers mostly labour intensive and employment generating sectors like processed agriculture/food items, handicrafts, handmade carpet (including silk), handloom products, coir and coir manufactures, jute raw and yarn and other jute manufactures, readymade garments and made ups covered under Chapter 61-63, fabrics of all types, toys, sports goods, paper and stationary, Cosmetics and Toiletries, Leather Goods and footwear, Ceramics and Allied Products, Glass and Glassware, Medical and Scientific Instruments, Optical Frames, Lenses, Sunglasses Etc., Auto Components/Parts, Bicycle & Parts, Articles of Iron or Steel (Notified lines), Misc. Articles of base metals (Notified lines), Industrial Machinery, Electrical and Engineering items, 1C Engine, Machine tools, Parts (Notified lines), Electrical Machinery and Equipment (Notified lines), Telecom Instruments (Notified lines) and all items manufactured by SMEs other than those covered above.
RBI issues Operational Instructions for Interest Equalisation / Interest Subvention / Interest Subsidy Scheme for Exporters
RBI vide Notification RBI/2015-16/259 DBR.Dir.BC.No.62/04.02.001/2015-16 December 4, 2015 has formulated the operational procedure for Interest Equalisation Scheme announced by GoI on 18th November, 2015 for the Exporters, as above.
RBI has advised all scheduled commercial banks, thru the above referred Notification, to adhere to the following operational procedure for claiming reimbursement:
A. Procedure for passing on the benefit of interest equalisation to exporters:
i) For the period April 1, 2015 to November 30, 2015, banks shall identify the eligible exporters as per the Government of India scheme and credit their accounts with the eligible amount of interest equalisation.
ii) From the month of December 2015 onwards, banks shall reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India.
iii) The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the interest equalisation will be available to the eligible exporters only during the period the scheme is in force.
B. Procedure for claiming reimbursement of interest equalisation benefit already passed on to eligible exporters
i) The sector-wise consolidated reimbursement claim for the period April 1, 2015 to November 30, 2015 for the amount of interest equalisation already passed on to eligible exporters should be submitted to RBI by December 15, 2015.
ii) The sector-wise consolidated monthly reimbursement claim for interest equalisation for the period December 2015 onwards should be submitted in original within 15 days from the end of the respective month, with bank’s seal and signed by authorised person, in the prescribed format given in Annex I.
iii) The claims should be accompanied by an External Auditor’s Certificate (with stamp and membership number) certifying that the claim for interest equalisation of Rupees…………….. for the month ended ………….. has been verified and found to be strictly in accordance with the provisions of the Government scheme enclosed with the circular DBR.Dir.BC.No.62/04.02.001/2015-16 dated December 4, 2015. Claims for reimbursement will be considered for settlement only after receipt of this certificate.
iv) The claims may be submitted to the Chief General Manager, Department of Banking Regulation, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort Mumbai – 400 001.
v) The reimbursement of interest equalisation claim will be made as and when the funds are received from Government of India. ..contd….