Interest Equalization Scheme (IES)
Boost your export competitiveness with government-subsidized interest rates on pre and post-shipment export credit.
Key Highlights
-
Interest Subsidy
3% for MSME exporters and 2% for other eligible exporters
-
Eligible Sectors
410+ MSME sectors and 416 tariff lines under non-MSME
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Scheme Duration
Extended until March 31, 2024
% Interest Subsidy for MSMEs
% Interest Subsidy for Others
+ Eligible MSME Sectors
Crore Budget Allocation
About Interest Equalization Scheme
The Interest Equalization Scheme (IES) is a key export promotion initiative by the Government of India to enhance the competitiveness of Indian exports in international markets.
Scheme Overview
The Interest Equalization Scheme was introduced on April 1, 2015, as part of the Foreign Trade Policy 2015-20. The scheme provides interest subsidies to eligible exporters on pre and post-shipment rupee export credit, making their products more competitive in global markets.
Under this scheme, the Government of India provides interest equalization at the rate of 3% to MSME exporters and 2% to other eligible exporters on pre and post-shipment rupee export credit. This effectively reduces the cost of financing for exporters, enabling them to offer more competitive prices in international markets.
Recent Updates
- The scheme has been extended until March 31, 2024
- Budget allocation of ₹2,376 crore for FY 2023-24
- Expanded coverage to include more sectors and products
- Enhanced benefits for MSME exporters
Scheme Objectives
Boost Export Competitiveness
Enhance the global competitiveness of Indian exports by reducing the cost of credit for exporters, allowing them to offer more competitive prices.
Support MSMEs
Provide additional support to MSME exporters through higher interest equalization rates, enabling them to compete effectively in international markets.
Balance Trade Deficit
Help reduce India's trade deficit by promoting exports through financial incentives and making Indian products more attractive in global markets.
Simplify Export Financing
Streamline the process of export financing by providing a transparent and efficient mechanism for interest equalization through scheduled banks.
Implementing Agencies
DGFT
Directorate General of Foreign Trade (DGFT) is responsible for policy formulation and implementation of the scheme.
RBI
Reserve Bank of India (RBI) oversees the implementation through scheduled commercial banks.
Banks
Scheduled commercial banks directly provide the interest equalization benefit to eligible exporters.
Benefits of Interest Equalization Scheme
The Interest Equalization Scheme offers numerous advantages to Indian exporters, helping them compete effectively in global markets.
Reduced Cost of Credit
Exporters benefit from lower interest rates on export credit, with a 3% subsidy for MSMEs and 2% for other eligible exporters. This significantly reduces financing costs and improves cash flow.
Enhanced Price Competitiveness
Lower financing costs enable exporters to offer more competitive prices in international markets, helping them secure more orders and expand their global market share.
Improved Working Capital
The scheme helps exporters optimize their working capital by reducing the cost of pre-shipment and post-shipment financing, allowing for better cash flow management.
Increased Export Volumes
By making exports more competitive, the scheme helps increase export volumes, contributing to business growth and expansion into new international markets.
Special Support for MSMEs
MSME exporters receive an enhanced interest equalization rate of 3%, providing additional support to smaller businesses in their export endeavors.
Simplified Process
The benefit is provided directly by banks without requiring exporters to file separate claims, making the process seamless and reducing administrative burden.
Financial Impact Example
| Scenario | Without IES | With IES (MSME) | With IES (Non-MSME) |
|---|---|---|---|
| Export Credit Amount | ₹1,00,00,000 | ₹1,00,00,000 | ₹1,00,00,000 |
| Bank Interest Rate | 9% | 9% | 9% |
| Interest Equalization | 0% | 3% | 2% |
| Effective Interest Rate | 9% | 6% | 7% |
| Annual Interest Cost | ₹9,00,000 | ₹6,00,000 | ₹7,00,000 |
| Annual Savings | - | ₹3,00,000 | ₹2,00,000 |
Success Stories
Hear from exporters who have benefited from the Interest Equalization Scheme.
Eligibility Criteria
Understand who can benefit from the Interest Equalization Scheme and what types of export credit are covered.
Eligible Exporters
MSME Exporters
- All MSME manufacturers who export goods under 410+ specified HS codes
- Must have valid Udyam Registration Certificate
- Eligible for 3% interest equalization
- Both pre-shipment and post-shipment rupee export credit
Non-MSME Exporters
- Manufacturer exporters exporting products under 416 specified tariff lines
- Eligible for 2% interest equalization
- Both pre-shipment and post-shipment rupee export credit
- Must export eligible products as listed in the scheme
Special Provisions
The scheme provides additional benefits for specific categories:
- Telecom Instrument Manufacturers
- Sports Goods Manufacturers
- Medical Device Manufacturers
Eligible Export Credit
Pre-Shipment Credit
Credit provided to an exporter prior to the shipment of goods to finance:
- Purchase of raw materials
- Processing of goods for export
- Packing of goods
- Other export preparation expenses
Post-Shipment Credit
Credit provided to an exporter after the shipment of goods to finance:
- Export receivables
- Working capital during the export cycle
- Bridge financing until payment is received
Ineligible Categories
- Merchant exporters (non-manufacturers)
- Service exporters
- Export credit in foreign currency (only rupee credit is eligible)
- Exports to countries under sanctions
- Products not listed in the eligible HS codes
Check Your Eligibility
Not sure if your products qualify for the Interest Equalization Scheme? Our experts can help you determine your eligibility and guide you through the application process.
Contact Our ExpertsApplication Process
The Interest Equalization Scheme follows a streamlined process to ensure eligible exporters receive benefits efficiently.
Verify Eligibility
Confirm that your business and products fall under the eligible categories for the Interest Equalization Scheme.
- Check if you are an MSME or non-MSME manufacturer exporter
- Verify your products against the list of eligible HS codes
- Ensure you have all required business registrations
Approach Your Bank
Contact your scheduled commercial bank that provides export credit facilities.
- Schedule a meeting with your bank's export finance department
- Discuss your export financing requirements
- Inform them about your eligibility for the Interest Equalization Scheme
Submit Documentation
Provide all necessary documents to your bank to establish your eligibility.
- MSME certificate (for MSME exporters)
- Manufacturing proof (factory license, GST registration, etc.)
- Export order details and documentation
- Product details with HS codes
- Other documents as required by your bank
Bank Verification
The bank will verify your eligibility and process your application.
- Bank reviews your documentation and export details
- Confirms eligibility under the scheme guidelines
- Verifies product HS codes against the eligible list
Receive Credit with Reduced Interest
Once approved, the bank will provide export credit at the reduced interest rate.
- Bank applies the interest equalization directly to your loan
- You pay only the effective interest rate (after subsidy)
- Bank handles the subsidy claim with RBI
Important Notes
For Exporters
- No separate application to DGFT is required
- The benefit is automatically passed on by the banks
- Keep your MSME registration updated
- Maintain proper documentation of exports
For Banks
- Banks claim reimbursement from RBI on a monthly basis
- Banks must maintain proper records of beneficiaries
- Banks are responsible for verifying exporter eligibility
Frequently Asked Questions
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