In regards to support exports and continuing trade account imbalance, the government of India has increased the rate of Interest Subvention from the existing 2 percent to 3 percent with full coverage of entire micro, small and medium enterprise (MSME) sector.
This was informed by Union Minister for Commerce & Industry, Anand Sharma at a press conference in New Delhi on Wednesday.
"We have decided and the Finance Minister is agreed to our recommendations to deepen the benefit of interest subvention and the rate of interest subvention available to all the SMEs and plus seven other sectors i.e. Handlooms, Handicraft, Carpets, Toys and Sports Goods, Processed Agricultural Products, Readymade Garments, 235 tariff lines in Engineering Sectors and addition 6 tariff lines in Chapter 63 of ITC (HS) (textiles made ups)," Sharma told media.
"These sectors are in addition to the MSME sector so the entire MSME sector has been covered."
"And the rates of interest subvention from tomorrow (1st August), which would be available to exporters would be enhanced to three percent from existing 2 percent," he added.
Presently the rate of Interest Subvention for credit obtained by exporters is 2 percent. There has been persistent demand to both increase the rate of subvention and also to widen the coverage.
At present, all exporters who are micro and small enterprises (MSE), irrespective of the export sector, are beneficiaries of this scheme.
In addition, the exporters belonging to the following sectors are eligible to receive interest subvention : (i) Handlooms (ii) Handicraft (iii) Carpets (iv) Toys and Sports Goods (v) Processed Agricultural Products (vi) Readymade Garments (vii) 235 tariff lines in Engineering Sectors, and (viii) 6 tariff lines in Chapter 63 of ITC(HS) (textiles made ups).
The Commerce Minister had taken up this issue with the Finance Minister. Both the Ministers have met on 26th July to consider this request from our exporters. It has now been decided by the Government to increase the rate of Interest Subvention from the existing 2% to 3%. All pending claims would also be cleared immediately.
This will benefit the exporters of micro, small and medium enterprises and also the most of the labour intensive sectors. Their cost will come down appropriately by increase in the rate of interest subvention.
The Commerce and Industry Minister has convened a meeting of Board of Trade (BoT) on 27 August, to review the current situation and the international trade scenario.
The government has been very much concerned about the weak exports in the continuing trade account imbalance as well as the deficits which needs to e addressed.
In regards to support the government had made certain announcements on 18th April in the form of continues interest subvention and expansion of coverage and also the other incentives in particular to encourage the domestic manufacturing.
"We are also considering how to widen the coverage. The DGFT and the commerce secretary are in the process of identifying the sectors and the tariff lines and those should be added very soon. This is the deepening of the coverage then widening," he added.