FIEO lauds extension of Interest Equalization benefit to merchant exporters

January 3, 2019: The extension of interest equalization benefit to merchant exporters will help in increasing country’s exports, believes Ganesh Kumar Gupta, president, FIEO.

Recently, the Cabinet Committee on Economic Affairs gave its approval to the proposal of including merchant exporters under the Interest Equalisation Scheme (IES) for Pre and Post Shipment Rupee Export Credit by allowing them interest equalisation rate of 3 percent on such credit for export of products covered under 416 tariff lines identified under the scheme. These products are largely in MSME/ labour intensive sectors such as Agriculture, Textiles, Leather, Handicraft, machinery, etc.

Merchant exporters contribute to about 35 percent of country’s exports and high cost of credit equally blunts their competitive edge, observes FIEO chief.

The support to merchant exporter is most timely as interest rates are moving northward in the country and the 3 percent subsidy will reduce their cost of operation significantly. This will help the MSME sector as most of exports by the merchant exporters are in respect of products manufactured by MSME. Therefore, the benefit will give a push to manufacturing in MSME creating job opportunities as well, said Gupta.