What is Interest equalisation Scheme (IES):
There are many benefits given to exporters, specially MSME sector exporters. One of the scheme is interest equalisation scheme (IES) or also known as interest subvention. This scheme was introduced with effect from 1st April 2015.
This is a rebate of interest provided on pre and post shipment export credit like packing credit.
Initially the interest is deducted and a rebate upto 5% is given subsequently based on eligibility and norms.
Banks provide this benefit to the eligible exporters and claim a reimbursement of same from RBI based on certification by an external auditor. Eligible exporter has to submit a certification by external auditor to claim this benefit.
Who can avail:
This scheme was implemented in 2015 for a period of 5 years. It was available for Manufacturer exporters and for exports in the identified 416 four digit tariff line and all MSME exporters. Subsequently from 2nd January 2019, Merchant exporters have also been included under the scheme if they fall under 416 four digit tariff line. Merchant exporters who does not fall under 416 tariff line are not eligible for this scheme.
What is the rate of IES
The rate of subvention was fixed at 3% from 1.5.2015 however for MSME sector, the rates has been increased to 5% with effect from 2nd November 2018. The rate for Large manufacturer and Merchant exporters remains at 3%.
DGFT has issued a trade notice No. 45/2018-19 dated 1st February 2019 in this regard to avail the maximum benefit by the industry.
The list of notifications issued for interest subvention are listed below:
DCBR. CO. SCB. Cir. No.1/13.05.0000/2015-16 dated February 11,2016