Government Initiatives for Small Exporters
The government has launched two measures aimed at enhancing trade finance access for small exporters, with a total allocation of ₹7,295 crore over a six-year period (FY26-31).
Interest Subvention Scheme
- The scheme, named “Interest Subvention for Pre- and Post-Shipment Rupee Export Credit,” targets MSMEs, helping them access export credit at competitive rates below market interest rates.
- The budgetary outlay for this scheme is ₹5,181 crore over six years, beginning with clearing arrears worth ₹830 crore.
- A base interest subvention of 2.75% is provided, with additional incentives for exports to under-represented or emerging markets, subject to operational readiness.
- The scheme is part of a larger ₹25,060 crore export-promotion mission approved in November.
- It revamps the discontinued “Interest Equalisation Scheme” (IES) and focuses mainly on small exporters, capping the annual benefit per firm at ₹50 lakh.
- Additional incentives are offered for MSMEs exporting to new markets, covering 75% of tariff lines.
- The subvention rates will be reviewed periodically based on domestic and global benchmarks.
- The RBI, in conjunction with the Directorate General of Foreign Trade (DGFT), will implement the scheme, and detailed guidelines will follow.
Collateral Support for Export Credit
- A ₹2,114 crore scheme is launched to provide credit-guarantee support for export-linked working-capital loans to MSMEs.
- Collateral guarantees up to ₹10 crore per firm are available.
- Guarantee coverage is up to 85% for micro and small exporters, and 65% for medium enterprises.
- This initiative complements existing credit guarantee mechanisms and aims to boost bank lending to export-oriented MSMEs.
- Guidelines will be issued by CGTMSE, followed by a pilot phase and integration into a comprehensive export promotion framework.
In the current financial year, the government expects to spend ₹400 crore on both schemes. Exclusions include restricted items, waste & scrap, production-linked incentive products, and those covered under specific remission schemes, while defence and dual-use products are included.
