Employees carry sacks of sugar in Simbhaoli, India (Photographer: Pankaj Nangia/Bloomberg)

Interest Subsidy To Merchant Exporters Will Help Boost Shipments, Says FIEO

The extension of three percent interest subsidy to merchant exporters, who account for around 35 percent of the total exports, will help boost outbound shipments, Federation of Indian Export Organisations President Ganesh Kumar Gupta said on Wednesday.

The government has decided to provide 3 percent 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 percent 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 three percent subsidy will reduce their cost of operations significantly.

Leading leather products manufacturer and exporter Farida Group Chairman Rafeeq Ahmed said the move would help exporters in getting credit at affordable rates.

"Like manufacturing exporters, merchant exporters too contribute significantly in exports. They should be encouraged," Ahmed said adding leather exports are expected to reach $6.2 billion by the end of 2018-19.

Council for Leather Exports Vice-Chairman Aqeel Ahmed too said that the move would help exporters who 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 and will end in March 2020. During April-November 2018-19, the country's merchandise exports grew 11.58 percent to $217.5 billion.