Lok Sabha Question No. 4033 (UNSTARRED), answered on 2025-03-25
Subject: Export Promotion Scheme
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Sribharat Mathukumilli

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 4033 ANSWERED ON 25/03/2025

## EXPORT PROMOTION SCHEME

## 4033.   SHRI SRIBHARAT MATHUKUMILLI:

Will  the  Minister  of  COMMERCE  AND  INDUSTRY ( ) be  pleased  to state:

- (a)         the  average  cost  of  borrowing  for  Indian  exporters  in  comparison  to  major  competing economies such as China, Vietnam, Malaysia and Thailand;
- (b)         the  details  of  the  interest  equalisation  scheme  including  interest  subvention  provided, number of beneficiaries and the funds allocated and released during the last four years;
- (c)        the reasons for the non-allocation of funds to the above scheme and its expected impact on the competitiveness of Indian exports;
- (d)        the  details  of  the  Export  Promotion  Scheme  announced  in  the  Budget,  including  the specific schemes covered under it and the timeline for their implementation; and
- (e)        whether any additional fiscal or policy interventions are planned to reduce interest cost until  the  new  scheme  is  implemented  and  if  so,  the  details  thereof  and  if  not,  the  reasons therefor?

## ANSWER

## ( ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI JITIN PRASADA)

- (a) In  India, the Repo Rate stands at approximately 6.25%, with exporters bearing interest rates ranging between 8 to 12% or even more depending on the spread and risk assessment of the borrower by the Authorised Dealer Banks.

Central Bank rates of competitor countries

| Country   |   Interest Rate (Central bank rates) in Mar-2024 |   Interest Rate (Central bank rates) in Jun-2024 | Interest Rate (Central bank rates) in 2025   |
|-----------|--------------------------------------------------|--------------------------------------------------|----------------------------------------------|
| India     |                                             6.5  |                                             6.5  | 6.25 (Mar 25)                                |
| China     |                                             3.45 |                                             3.35 | 3.1 (Feb 25)                                 |
| Malaysia  |                                             3    |                                             3    | 3 (Mar 25)                                   |
| Thailand  |                                             2.5  |                                             2.5  | 2 (Feb 25)                                   |
| Vietnam   |                                             4.5  |                                             4.5  | 4.5 (Dec, 2024)                              |

Source: Respective Central banks of the Competitor Country.

(b) Interest  Equalisation  had  been  an  important  policy  instrument,  especially  for  MSME exporters, for bringing down the higher cost of credit incurred by Indian exporters vis-a-vis their foreign competitors.

Up to 30.06.2024 the Scheme covered all ITC (HS) codes for exports made by Micro, Small & Medium Enterprises (MSMEs) at 3% interest equalisation, and 410 identified tariff lines at 4digit ITC HS (Indian Trade Classification Harmonized System) code level for exports made by manufacturer and merchant exporters at 2% interest equalisation. From 01.07.2024 onwards, the scheme has been partially  extended till 31.12.2024 for MSME manufacturer exporters with a value cap of Rs.50 Lakhs per exporter for FY 2024-25 up to December 2024.

Approximately, 11000 exporters avail the benefits under the scheme.

Details of the funds allocated and released during the last four years is as follows:

|   S. No. | Financial Year   | Actual Expenditure (in crore)                             |
|----------|------------------|-----------------------------------------------------------|
|        1 | 2021-22          | Reimbursed Rs.3488 (including arrears of previous year)   |
|        2 | 2022-23          | Reimbursed Rs. 3118 (including arrears of previous year)  |
|        3 | 2023-24          | Reimbursed Rs.3699.9 (including arrears of previous year) |
|        4 | 2024-25          | Reimbursed Rs. 2482 (including arrears of previous year)  |

(c) to (e) Presently,  Interest  Equalisation  has  been  merged  under  the  Export  Promotion Mission in which a budgetary allocation of Rs 2250 crore has been made.

Government is undertaking stakeholder consultation with regard to Export Promotion Mission with a budgetary allocation of Rs. 2250 Crore with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME, and Finance. The focus is on facilitating easy access to

export  credit,  cross-border  factoring  support,  and  support  to  MSMEs  to  tackle  non-tariff measures in overseas markets.

A  digital  public  infrastructure,  'Bharat  Trade  Net'  (BTN)  for  international  trade  is  a  Budget announcement for a unified platform for trade documentation and financing solutions.

The specific schemes covered under it and the timeline for their implementation is still under consultation with the working group.

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