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Indian Govt may extend loan interest subsidy for exporters by 3 years to boost shipments

New Delhi: The government is expected to extend the interest subsidy scheme for exporters for three years to help boost overseas shipments that have been in the negative zone since last December.

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The ministries of commerce and finance are discussing the issue, and their decision is likely to be sent soon to the Union Cabinet for approval, sources said.

There were some issues regarding the time period but that was resolved and the government may extend the scheme for three years, they said.

Under the interest subvention scheme, exporters get loans at affordable rates. Loans at subsidised rates will help exporters boost shipments as the country’s exports have been in the negative zone during the past seven months.

The interest subvention scheme of 3% ended on March 31 last year.

Hit by global slowdown, India’s exports contracted for the eighth straight month by 10.3% in July to $23.13 billion, pushing the trade deficit to $12.81 billion.

The last time exports registered a positive growth was in November, when shipments expanded at a rate of 7.27%.

Federation of Indian Exports Organisation is demanding to extend it retrospectively from April 2014.

Cost of credit is important for exporters as they are facing stiff competition from countries such as Bangladesh and Vietnam, FIEO has said.

Earlier, eight sectors including handicrafts, handlooms, carpets, sports goods, and few engineering products were availing the benefit of this scheme.

The Commerce Ministry is taking several steps to boost exports, which have been hovering at around $300 billion for the last four financial years.

It is involving states in pushing the shipments. It has also taken steps towards promoting ease of doing business in order to reduce transactions cost for exporters.

High growth in exports would help boost manufacturing activities and overall economic growth.