India has launched two additional components of its Export Promotion Mission, with the Centre rolling out an interest subvention scheme for pre- and post-shipment export credit under the Niryat Protsahan initiative, aimed at making trade finance cheaper and more accessible for MSME exporters.
The interest subvention scheme is intended to help MSMEs access export credit at competitive rates below prevailing market levels. It will apply to both pre-shipment and post-shipment rupee export credit, with the subvention benchmarked against repo rates in India and comparable economies. The government has earmarked a budgetary outlay of ₹5,181 crore for the scheme over six years, up to FY31.
Eligible MSMEs exporting goods under a notified positive list of six-digit HSN tariff lines will be covered, accounting for around 75% of tariff lines. All eligible MSME exporters will receive a 2.75% interest subvention, with an additional incentive for those exporting to new and emerging markets. The benefit will be capped at ₹50 lakh per exporting firm annually.
According to the Commerce Ministry, the subvention rate will be floating and linked to the repo rate, to be notified by the Reserve Bank of India every three months and reviewed every six months. A sub-committee, including the Department of Financial Services, will oversee the framework. Banks currently extend export credit on a repo-plus basis, with the spread determined by individual lenders.