AEPC has sought a two-year extension of the interest equalisation scheme that expired last month and enhancement of the rate of subsidy on the interest rate to 5 per cent from the existing 3 per cent. As per AEPC estimates, the disruptions in orders and payments brought about by the spread of the COVID-19 pandemic globally could lead to a loss of $ 4 billion for garment exporters.
The interest equalisation scheme announced for five years in 2015, offered a 3 per cent subsidy on pre and post-shipment export credit to exporters of 416 items and the MSME sector. The subsidy rate was enhanced to 5 per cent for the MSME sector in 2018.
AEPC sought early action on the extension of the scheme as in the absence of any announcement on the matte, banks had started debiting the accounts of the exporters. According to the council, at a time when garment exporters are struggling to stay afloat in a shrinking global market, uncertainty surrounding the fate of the popular scheme was adding to the exporters’ woes.