Srinagar, May 28: The Reserve Bank of India has extended the Interest Equalisation
“RBI’s Interest Equalisation Scheme” is a scheme introduced by the Reserve Bank of India (RBI) to provide interest rate subsidies to exporters in specific sectors. The scheme aims to make Indian products more competitive in the global market by reducing the cost of credit for exporters.
Speaking to Ziraat Times, several exporters from J&K said that this extension would provide an extended window of benefits for Kashmir’s handicrafts which had taken a severe hit during the Covid pandemic.
“With this extended window, and the interest rate benefits, we look at the possibility of better competitiveness of our exports”, Nazir Ahmad Khan, an exporter told Ziraat Times.
Under the Interest Equalisation Scheme, eligible exporters receive an interest rate subsidy on their pre-shipment and post-shipment export credit. The subsidy is provided to offset the higher cost of borrowing faced by exporters due to high-interest rates in the domestic market.
“For businesses and industrialists in Jammu & Kashmir, the Interest Equalisation Scheme can have significant benefits. As Jammu & Kashmir is a geographically distinct region with unique economic challenges, this scheme provides a level playing field for local businesses and industrialists by reducing their borrowing costs”, Naveen Gupta, another exporter said.
Since its inception, the scheme has helped businesses in Jammu & Kashmir to compete with exporters from other regions by making their products more price-competitive in the international market. It encourages local businesses to expand their export activities, diversify their product range, and explore new markets.
By reducing the interest burden on export credit, the Interest Equalisation Scheme has been helping sustainability of a few exports in Jammu & Kashmir. It has also facilitated access to affordable credit.
The RBI’s Interest Equalisation Scheme was originally implemented for a period of five years from April 1, 2015, to March 31, 2020. However, the scheme has been extended multiple times by the RBI since its inception to provide continued support to exporters. The scheme has undergone revisions and extensions based on the evolving economic and export-related requirements of the country.
