By Consultants Review Team
Exporters are demanding that the Interest Equalization Scheme (IES) rate at 3 percent to 6 percent in the view of increased cost of funding. At the average bank interest rate there is an increase of 3 percent because of the rise in repo rate since last year. The increase in section of the interest part the average bank has been including the rise of repo since the last year which has led to the increased cost of funding.
The government provides pre- and post-shipment credit scheme to exporters to enable them get fund to cover the cost. MSME manufacturers and merchant exporters take benefit of this scheme to cover the packaging expense of pre-shipment. The current rate of IES is 3%.
Rajkot Chamber of Commerce and Industry (RCCI) vice-president Parth Ganatra said, “We have represented to the finance minister on behalf of all exporters to provide interest subvention of 6% instead of current 3%. We get loan for pre-shipment from the banks, the government provides 3% subvention which means the government bears the 3% interest.”
According to RCCI, around 80 per cent of exporters are taking benefit of this scheme. Utsav Doshi, an exporter of Rajkot, said: “The average interest rate increased to 11% from 8% before a year and that is why the cost for getting fund increased for exporters. The high cost of funding is making us non-competitive in international market and that is why it is necessary that government should revise IES rate.”
IES was introduced in 2015 in Foreign Trade Policy and lapsed in September 2021.