Govt caps interest subvention amount at Rs 5 crores per IEC for MSME manufacturers

In a trade notice on September 17, the Directorate General of Foreign Trade (DGFT) announced the amendment under the Interest Equalization Scheme (IES) with immediate effect “for rationalization of the scheme.” The Commerce Ministry has imposed an interest subvention cap of Rs 5 crores per IEC (import-export code) for MSME manufactures till September 30, 2024 for the current fiscal. “The annual net subvention amount is capped at Rs 10 Crs. per IEC for a given financial year, accordingly a cap of Rs. 5 Crs. per IEC for MSME Manufacturers is imposed till 30.09.2024 for the financial year starting from 01.04.2024,” the notice read. DGFT also clarified that the cap was Rs 2.5 crores for manufacturer exporters and merchant exporters till June 30, 2024. An IEC is a 10-digit alphanumeric code required by businesses exporting or importing goods and services for clearing customs, sending shipments, and sending or receiving money in foreign currency. Earlier this month, DGFT had announced the extension of IES for pre and post-shipment rupee export credit for a month till September 30 for MSME manufacturing exporters. The scheme aims to provide pre and post shipment packing credit at competitive rates for exporters to compete internationally. It enables interest equalization benefit at 2% on pre and post shipment Rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines and 3% to all MSME manufacturer exporters. The rebate offered by banks is reimbursed by the Government. The Union Cabinet chaired by Prime Minister Narendra Modi in December last year had approved an additional allocation of Rs 2,500 crores for the continuation of the scheme till June 30, 2024.