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Interest equalization scheme – Enrich Professional Services

Interest equalization scheme - Enrich Professional Services

The interest equalization scheme is for both pre and post-shipment rupee export extension of credits. People have asked for the extension of the Interest equalization scheme to which the Government also has given a green signal to it while the Government of India has approved the extension which was asked for pre and post shipment rupee export credit scheme till 31 March 2024 or can also be extended more. The Extension starts on 1 October 2021 and ends on 31 March 2024. It can also get extended if later the notice is provided.

What are various different modifications available made by the Government to the scheme?

Except for manufacturer exporters of MSME, the sector having HS lines totally of six, known as telecom instruments shall be out soon for the purview of the scheme.
The revised rates for interest equalization are under the scheme and now for MSME manufacturer exporters it will be available for 3 percent under any of HS lines and under 410 HS lines, it will be 2 percent for manufacturer exporters and merchant exporters. ( For 410 HS lines when you exclude 6 HS lines that pertain to the telecom sector)
When the bank issue approval to the Exporter there will be an interest rate that will be prevailing, interest subvention is being provided and to each exporter, a net rate is being charged for ensuring greater accountability and transparency while being in operation of the scheme.
The beneficiaries who get benefits under the Production Linked Incentive (PLI) scheme of the government extended scheme will not be available.
Banks should be able to identify who are the exporters which are eligible for the scheme while crediting their accounts the eligible amount of interest equalization from October 1 2021 to March 31 2021 and you’ve to submit consolidated reimbursement claim sector-wise to the Reserve Bank for the said period by April 30th, 2022.
It was discussed before that banks can reduce the interest rate from April 1, 2022, to charge to eligible exporters upfront as per required guidelines, and the claims which can be submitted originally within 15 days from the respective month’s end which will be sealed with the bank and signed by an authorized person, in the modified prescribed format.
Other provisions will be unchanged by extant instructions on a captioned scheme by the bank.

Sectors in annexure 1 and the respective amount is calculated:

There is annexure 1 attached to this which has sectors like Handicraft, carpet handmade, handloom products, sports goods, toys, paper stationeries, toiletries and cosmetics, fabrics of all types, glass and glassware, ceramic products and allied products, Lenses, optical frames, sunglasses, articles of iron and steel, Process agriculture or food items, coir, and coir manufactures, jute raw yarn, other jute manufacturers, readymade garments and made-ups, bicycle and parts, auto components/ parts, Industrial machinery, etc. There are various sectors in which the amount is calculated like Total amount of interest equalization reimbursement claimed, amount of interest equalization reimbursement claimed in respect of beneficiaries belonging to Scheduled Castes (SC), amount of interest equalization reimbursement claimed in respect of beneficiaries belonging to Scheduled Tribes (ST), amount of interest equalization reimbursement claimed in respect of exporters from North Eastern Region (NER).
The guidelines of all these are verified and certified having the following guidelines stated in the RBI circular while disbursing loans to all the exporters. The prevailing interest, providing subvention interest, net rate charging to each borrower.

UIN can be generated by following steps by concerned exporters:

You’ve to always register on the DGFT website if you’re an exporter seeking to apply under IES and you’ve to make sure that your online account is linked to the applicant’s IEC, to reflect correct and up-to-date details of the exporter importer profile while updating it.
You’ve to fill in the required details while logging in with the correct login credentials which are registered by navigating the service, Interest equalization scheme, and apply for the interest equalization scheme.
When the duly submitted application is submitted online, an acknowledgment containing UIN is auto-generated.
SMS and Email will be sent to the registered email account and mobile number of the exporter when the UIN gets generated.
200 will be the charge which should be paid online which the users charge for getting a UIN. After the UIN is generated, no changes can be done. If the Exporter wants they can generate a new UIN.

Validity and Help/ Guidance:

UIN has a validity of 1 year from the date of registration, and the application can be sent online while availing the benefit of IES from the concerned bank. Along with the prescribed application UIN number which is auto-generated needs to be submitted to the bank for the benefits of IES. The applicant or the exporter needs to submit the application on or before April 1 2022 to the concerned bank. Benefits will be issued and scrutinized by the banks as per their own internal process. The validation of submission is issued by RBI separately by the Exporter. You can take the help of manual and FAQs on the DGFT website if you need any help or guidance in this matter.

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Authors Bio:-

Sudheer Varma Vegesna  

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