Interest Rate Subvention for Exports – Rs. 404 crore
Sanctioned
Provision
of Budget for Rupees Export Credit Subvention to Scheduled Commercial Banks
The cabinet
Committee on Economic Affairs on 30 December approved provision of Rs. 404 crore and also approved an addition amount of Rs. 996 crore (after adjustment of Rs.404 crore
from the requirement of Rs. 1400 crore as advised by
Department of Financial Services) for meeting pending interest subvention
claims of banks, as requested by RBI.
The interest subvention scheme was
introduced in July 2007 vide RBI notification dated 13.7.2007 on the advice of
Ministry of Finance to help exporters offset the losses on account of global
recession. In this scheme, which is operated by the Reserve Bank of India,
Government provides interest subvention of 2 percentage points per annum to all
scheduled commercial banks in respect of rupee export credit to the specified
categories of exporters. The scheme covered the following sectors viz. Textiles
(including Handlooms), Readymade Garments, Leather Products, Handicrafts,
Engineering Products, Processed Agricultural Products, Marine Pro-ducts.,
Sports Goods and Toys. Subsequently, the scheme was extended up to 31.03.2008
and two new sectors were included viz. Solvent Extracted De-oiled cake and
Plastics & Linoleum.
Subsequently,
the scheme was extended upto 31.3.2010 on pre and
post shipment rupee export credit for the following employment oriented export
sectors viz. Textiles (including Handloom); Handicrafts; Carpets; Leather; Gems
& Jewellery; Marine products and Small &
Medium Enterprises Thereafter, Government decided to extend the scheme w.e.f April 1, 2010 to March 31, 2011 on pre and post
shipment rupee credit to employment oriented sectors viz. Handicrafts; Carpets;
Handlooms; Small & Medium Enterprises (SME).
Under
the first scheme of subvention, Reserve Bank of India had originally estimated
the requirement of an amount of Rs.1350 crore for the
period from July 1, 2007 to September 30, 2008. As regards the second scheme of
subvention from December 1, 2008 to March 30, 2010, the RBI estimated the
requirement of an amount Rs.1250 crore. CCEA approved
release of Rs.800 crore and Rs.450 crore in its meetings dated 21.2.2008 and 23.2.2009
respectively for interest subvention. The balance amount to be released to
Reserve Bank of India is Rs. 1400 crore (rounded
off).
In the
meanwhile, Government decided to extend the scheme on the same terms and
conditions from 1.4.2010 to 31.3.2011 to certain additional sectors/sub-sectors
in addition to the employment oriented export sectors, namely, Leather and
leather manufactures, Jute manu-facturing including
Floor Covering, Engineering Goods and Textiles, for which Rs. 404 crore has been provided to Department of Commerce in the
1st Batch of Supplementary Demand for Grants for the year 2010-11.