The commerce ministry has asked its finance counterpart to increase the rate of subsidy under the interest subvention scheme to 5 percent from the existing 3 percent on credit provided to exporters. Director General of Foreign Trade (DGFT) Alok Vardhan Chaturvedi has said that the government has increased allocations towards interest equalisation scheme in the Budget to Rs 2500 crore from Rs 1,000 crore earlier for 2018-19 to encourage exports.
Commerce and Industry Minister Suresh Prabhu has said that the cost of capital in India is much higher as compared to other countries. Besides, he pointed out that infrastructure inefficiencies and logistics costs too are high as compared to India's competitors including Singapore and Malaysia. He noted that products being sold in global markets need to be at a level playing field. He added that interest subsidy to some extent neutralises infrastructure inefficiencies.
The minister further said that the incentives for exports would add up to over Rs 1 lakh crore, including the duty forgone on schemes such as Merchandise Exports from India Scheme (MEIS) and advance authorization. Besides, he noted that work is in progress to see ways to increase exports of goods and services to $1 trillion in the coming years. On whether increase in customs duties on certain items could be seen as a protectionist measure, he said that it is not, and India is one of the most open economies in the world.