Rs 2,700 cr a year on interest subvention

After measures to shore up merchandise exports, the Cabinet Committee on Economic Affairs on Wednesday approved the long-pending demand of exporters to restore the interest subvention scheme. With effect from April 1, 2015, the scheme would be applicable for five years with a provision for review after three years.

The move came after merchandise exports declined for the 11th straight month in October. The contraction was longer than during the global financial crisis in 2008-09 when exports fell for nine months.

Exporters expressed satisfaction over restoration of the scheme, now rechristened interest equalisation scheme, but said they would wait awhile to assess whether exports would start rising. The loans can be taken for exporting commodities across 416 tariff lines with the difference being paid by the government. While the operational instructions will be issued by RBI, the financial implication of the scheme is estimated at Rs 2,500-2,700 crore a year.