Government should restore five percent assistance to small industries under interest normalization scheme: FIEO

New Delhi, Sep 14 (PTI) The Federation of Indian Export Organizations (FIEO) has decided to restore the interest subvention or normalization scheme (IES) to five per cent for MSMEs engaged in manufacturing and three per cent in case of other items. demanded from the government. This demand has been made amidst challenges facing the business globally and rising debt cost along with increase in interest.

FIEO President Dr. A. Sakthivel told reporters on Wednesday, “Russia-Ukraine war has adversely affected the prices of crude oil and food items. This has posed challenges to global trade. ,

He said, “With these challenges, interest rates have increased, due to which MSMEs (Micro, Small and Medium Enterprises) are getting loans at 10-11 percent interest. The policy rate is expected to increase further in the monetary policy review in September. This will make the loan more expensive. In such a situation, there is a need to restore the benefit of five percent for MSMEs engaged in manufacturing under the interest subvention or normalization scheme and three percent in case of other ‘tariff lines’ (products under different duty rates).

Under IES, interest subvention is given on loans in rupees before and after exports.

The Reserve Bank of India will present its monetary policy review later this month.

It is noteworthy that with the extension of the interest normalization scheme from September 30, 2021 to March 31, 2024, the interest subvention under it was reduced. The reason for this was the low interest rate at that time.

“But with the situation changing, interest subvention in case of MSMEs and other commodities needs to be restored to the previous level,” Sakthivel said.

He also said that there has been a lot of impetus from the notification of the Reserve Bank of India to allow export-import in Indian rupees.

Sakthivel said that however, there is a need for some clarity on exports in Indian Rupees. This includes matters relating to export benefits etc. to exporters.

Dr. Ajay Sahai, Director General and Chief Executive Officer (CEO), FIEO, said, “Export growth has been marginally lower in the first five months of the current financial year. However, it is expected to pick up from the second half.

He said, “Almost all the economies of the world are affected by rising inflation. Demand has been affected due to impact on purchasing power. There is a lot of stock left before that. However, the demand for low value goods is increasing significantly. That is why we believe that the export volume will remain the same but there may be an impact on the export price.