Interest Rate Challenge: How Commerce Ministry Strives to Boost Export Competitiveness

High interest rates deter the exporters' community. The commerce ministry collaborates with finance counterparts to address this. The Interest Equalisation Scheme aims to neutralize high rates and enhance MSME export competitiveness. The ministry strives for a collateral-free finance for MSMEs to improve their global market integration.

The country's high interest rates are hindering the competitiveness of its exporters, particularly the MSME community. The commerce ministry is actively collaborating with the finance ministry to bring about solutions, with a key focus on the Interest Equalisation Scheme (IES), as per a senior government official.

Director General of Foreign Trade Santosh Kumar Sarangi highlighted the struggle to persuade the finance ministry of the IES's role in maintaining manufacturing competitiveness. He noted that the high collateral demand from financial institutions deters MSMEs from accessing finance, limiting their participation in the export market.

The ministry is seeking a collateral-free or subsidized arrangement for MSMEs, given India's high interest rates compared to Southeast Asia. The IES partly offsets these rates for exporters and will continue until December 31. Officials aim to further demonstrate the scheme's critical role in supporting MSMEs in the global market, particularly amid current economic challenges.

(With inputs from agencies.)