FOCUS NEEDED ON INTEREST SUBVENTION PLAN: FIEO CEO

Director General & CEO, Federation of Indian Export Organisations (FIEO) Ajai Sahai shares with The Sunday Guardian his hope to see the interest subvention scheme find its place in the Government’s 100-day agenda and the relevance of the scheme amidst global disruptions here are some excerpts.

- NIVEDITA MUKHERJEE

Nivedita Mukherjee

Q: Why is the interest subvention scheme that FIEO has raised, so critical now as the Govt looks at a third term in office? A: As of now, the interest subvention scheme is valid till 30 June. Exporters who are now negotiating contracts, have to look into the supplies of the contract they have to deliver in the July to September period. There is some doubt in their minds as to what happens to the scheme post-June because if I have to take a position now for my shipments between July and September, I would want a little certainty about that. Hence from that perspective, we are asking the Government to look into the extension of the scheme.

We are also seeking steeper intervention from Government because when the interest subvention was announced, the rate was five per cent for MSMEs in manufacturing sector and 3 per cent for some of the 410 HS lines which the government thought was important to protect the sectors. The subvention rates were reduced from 5 per cent to 3 per cent, and from 3 per cent to 2 per cent respectively, in March 2022, due to drop in interest rates.

It is worthwhile to note that the Repo Rate in March 2022 was 4.4 per cent, which currently is 6.5 per cent. So general increase in the credit rate is 3 per cent plus. That is why we are saying that the interest subvention may be restored to 3 per cent for 410 tariff lines and 5 per cent for MSME manufacturers as export competitiveness as compared to that time has come down. The short point is that I am making a reasonable request and I want it to be addressed as early as possible.

Q: Is this important for you as part of Modi 3.0’s 100-day agenda?