The Union government of India on 31 July 2013 decided to enhance the rate of interest subvention scheme for exports to three per cent, to reverse the declining trend in exports. The scheme will cover the entire MSME besides some other sectors. The rate of interest subvention was raised to 3 per cent from 2 per cent with immediate effect and that the scheme would now include more businesses.
The Salient Features of the Scheme are as following:
• State-run banks give loans to exporters of select goods, and micro, small and medium enterprises at a discount to the existing rate of interest. The government will reimburse the difference to those banks.
• The scheme is expected to cover toys, carpets, handlooms, handicraft, sports goods, processed foods and readymade garments in addition to 235 tariff lines in engineering and six tariff lines in textile sectors.
India at present is facing a sharp decline in exports despite a steep fall in its currency, which has resulted in further widening of its current account deficit.
Exports declined 4.6 per cent to 23.79 billion US dollars in June 2013, the second straight month of decline. India's current account deficit widened to an all-time high of 4.8 per cent of the GDP in 2012-13, exports need to be boosted to solve this problem. The government has set an export target of 325 billion US dollars for the fiscal year 2013-14.
When: 31 July 2013.
Why: to boost Exports.