The extension of 3 per cent interest subsidy to merchant exporters, who account for around 35 per cent of the total exports, will help boost outbound shipments, FIEO President Ganesh Kumar Gupta said Wednesday.
The government has decided to provide 3 per cent interest subsidy to merchant exporters, entailing an expenditure of Rs 600 crore, to enhance liquidity with a view to boosting outbound shipments.
"Merchant exporters contribute about 35 per cent of the country's exports and high cost of credit equally blunts their competitive edge," Gupta said in a statement.
He said the support to merchant exporters is most timely as interest rates are moving northward in the country and the 3 per cent subsidy will reduce their cost of operation significantly.
"This will help the MSME sector as most of the exports by the merchant exporters are in respect of products manufactured by MSME. Therefore, the benefit will give a push to manufacturing in MSME creating job opportunities as well," Gupta added.
Leading leather products manufacturer and exporter Farida Group Chairman Rafeeq Ahmed said the move would help exporters in getting credit at affordable rates.
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"Like manufacturing exporters, merchant exporters too contribute significantly in exports. They should be encouraged," Ahmed said adding leather exports are expected to reach USD 6.2 billion by the end of 2018-19.
Council for Leather Exports (CLE) Vice-Chairman Aqeel Ahmed too said that the move would help exporters, which were facing financial hardships.
"Leather exports would register healthy growth this fiscal. We welcome the government's decision," he added.
The interest equalisation scheme for pre- and post-shipment rupee export credit started on April 1, 2015. The scheme will end in March 2020.
During April-November 2018-19, the country's merchandise exports grew by 11.58 per cent to USD 217.5 billion.
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