Extend Interest Subsidy for Exporters: Parliamentary Panel

New Delhi, Mar 21 (PTI) The withdrawal of the interest equalisation scheme and its merger with the export promotion mission is going to adversely affect the Indian exporters and it should be extended till the operationalization of the mission, according to a report of a Parliamentary panel.

The mission which was announced in the budget has an outlay of Rs 2,250 crore.

The Department of Commerce has informed the Standing Committee of Parliament on Commerce that under the export promotion mission (EPM), it is working to carve out an umbrella scheme with various components, in consultation with the ministries of Finance and MSME.

"Once the cabinet approves the scheme, additional funds required will be sought from the Department of Expenditure," the commerce department has informed the committee.

The committee has stated that cost of finance and logistics still remains comparatively high in India in comparison to its competitors and the Interest Equalisation Scheme has provided some succour to the exporters, by compensating for the high cost of export credit.

"However the withdrawal of the Scheme and its merger with EPM, which is still not operational, is going to adversely effect the Indian exporters. The Committee recommends that this Scheme should be extended till the operationalization of the Mission. The Committee recommends that this Scheme should be extended till the operationalization of the EPM," it said.

It was also suggested that the Department of Commerce should carry out a detailed assessment of its requirement for funds and if required, seek additional funds well in time at the RE (revised estimate) stage.

In India, the Repo Rate stands at about 6.25 per cent, with exporters bearing interest rates ranging between 8 to 12 per cent or even more due to high spread of the banks which makes the country's exports uncompetitive vis-a-vis competitor countries.

"The Committee would have ideally preferred continuation of the Scheme.

However, if a new scheme is being envisaged, the component of Interest Equalisation must be duly incorporated with adequate allocation of funds," the standing committee said.

It also said that amongst the countries with whom India has signed Free Trade Agreements (FTAs), some countries like Australia, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Vietnam, etc. export much more than what they import from India.

The Department of Commerce should take measures to target these countries with specific products/services so as to bridge the balance of trade gap with these countries, it said adding the Department should proactively take measures to conclude the FTAs which are under consideration for mutually beneficial trade opportunities with various countries.

India is negotiating trade pacts with the US, UK, European Union, Australia, Oman and New Zealand.