New Delhi, Nov 30 (KNN) The government has increased the Interest Equalization rate from existing 3 per cent to 5 per cent for the exports made by Micro, Small and Medium Enterprises (MSME) sector manufacturers under the Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit.

The rate has been increased with effect from November 2, 2018.

The Reserve Bank of India (RBI) in a circular to all Scheduled Commercial Banks, Small Finance Banks and Primary (Urban) Cooperative Banks informed that, “…it has been decided by the Government of India to increase w.e.f November 2, 2018 Interest Equalization rate from 3% to 5% in respect of exports made by the Micro, Small and Medium Enterprises (MSME) sector manufacturers under the Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit.”

RBI has asked the banks to provide benefits of the scheme to all eligible MSME exporters.

The Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit came into effective from April 1, 2015.

The scheme is available to all exports under 416 tariff lines [at ITC (HS) code of 4 digit] as per Annexure A and exports made by Micro, Small & Medium Enterprises (MSMEs) across all ITC (HS) codes.

This scheme, however, is not available for merchant exporters.

The commerce ministry had earlier this year, proposed to its finance counterpart that the prescribed rates under the interest equalisation scheme should be revised upwards from 3 per cent to 5 per cent.

The scheme allows small and medium exporters in labour-intensive sectors to avail loans from banks at a lower rate of 3 per cent. (KNN Bureau)