Interest Equalisation Scheme / Export Interest Subvention Scheme on Pre and Post Shipment Rupee Export Credit

What is the Export Interest Subvention Scheme?

The Export Interest Subvention Scheme is a credit-support scheme that lowers the cost of borrowing for exporters. Under it, an eligible exporter pays a reduced rate of interest on the working-capital loans it takes to fulfil an export order. The pre-shipment credit used to buy raw materials and manufacture the goods, and the post-shipment credit that bridges the gap until the overseas buyer pays. The government meets part of the interest cost, so the exporter's effective borrowing rate falls.

The scheme is notified by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, and is delivered through the banking system with the Reserve Bank of India (RBI) as the settlement agency. It sits within the government's Export Promotion Mission (Niryat Prothsahan), a wider package to improve exporters' access to affordable credit.

This scheme is the successor to the long-running Interest Equalisation Scheme (IES), and understanding that history matters because the terms have changed.

What happened to the old Interest Equalisation Scheme?

The Interest Equalisation Scheme on pre- and post-shipment rupee export credit ran for several years and was extended repeatedly in short instalments. According to trade and financial reporting, the scheme was extended for a final three months and lapsed on 31 December 2024.

Under that older scheme, the benefit was 2% per annum for merchant and manufacturer exporters of 410 identified tariff lines and 3% per annum for all MSME manufacturer exporters. In its final year the benefit was capped at Rs 50 lakh per firm for 2024-25, and firms that had already drawn Rs 50 lakh or more of benefit by 30 September 2024 got nothing further in the extended window.

After the IES lapsed, the interest-support function was carried into the Export Promotion Mission, and a fresh interest subvention scheme was launched through DGFT Trade Notice No. 20/2025-26 dated 2 January 2026.

What does the current scheme provide?

According to the DGFT guidelines, the current interest subvention scheme provides:

• Rate: interest subvention of 2.75% per annum on both pre-shipment and post-shipment rupee export credit.
• Cap: a maximum benefit of Rs 50 lakh per MSME exporter per financial year.
• Coverage: exports of goods falling under a notified positive list of HSN six-digit tariff codes, which is to be reviewed periodically on parameters such as MSME concentration, labour intensity and sectoral export characteristics.
• Rate review: the subvention rate is to be reviewed bi-annually, in March and September, against domestic and global benchmarks.

The scheme is being run through the RBI on a pilot basis: lending banks pass the interest benefit on to eligible exporters upfront by charging a lower rate, and then claim reimbursement from the RBI under the prescribed operational framework. According to the DGFT trade notice, the scheme took effect from 2 January 2026 and was opened alongside a 30-day stakeholder consultation, so the rules can be refined based on exporter feedback.

Which exports are covered by the positive list?

The subvention applies only to goods on a positive list of HS six-digit tariff lines. According to the trade notice, that list runs to 4,139 tariff lines, and it is set out at Annexure-II of the notice. The list is built around objective parameters: sectoral MSME concentration, labour intensity and export concentration ratios — and DGFT has said it will be reviewed periodically, so a line can be added or dropped over time.

Not every product qualifies. Steel products are excluded from the positive list, for example. Before relying on the benefit, an exporter should check that its specific HS six-digit code appears on the current Annexure-II, because a product one line away from a covered code may not attract any subvention at all.

Who is eligible for the interest subvention?

A firm can claim if it:

• Is an MSME manufacturer exporter or merchant exporter with valid Udyam (MSME) registration and an Importer Exporter Code (IEC).
• Exports goods falling under the notified positive list of HSN six-digit tariff codes.
• Has sanctioned pre-shipment or post-shipment rupee export credit from a lending institution.
• Files the required online declaration on the DGFT portal and obtains a Unique Identification Number (UIN).

Who cannot claim:

• Individuals who are not exporters cannot claim a personal benefit. This is a business credit-support scheme, not a citizen loan subsidy.
• Firms whose export products are not on the notified positive list are not eligible.
• A firm that has already exhausted its Rs 50 lakh annual cap gets no further benefit in that financial year.
• Exporters availing certain other subsidy or benefit on the same credit, or those otherwise excluded under the guidelines, are not eligible to double-dip.

The scope is narrower than the old IES: the current pilot focuses on MSME manufacturer and merchant exporters, rather than also covering non-MSME manufacturer exporters of the 410 tariff lines.

How to apply for the interest subvention

The benefit is delivered through the exporter's bank, but the exporter must register the claim online. The steps are:

1. Ensure your firm holds a valid IEC and Udyam (MSME) registration, and confirm that your export product's HSN code is on the notified positive list.
2. Approach your bank for pre-shipment or post-shipment rupee export credit against your export order or letter of credit.
3. File the online declaration on the DGFT portal and obtain a Unique Identification Number (UIN) linked to your bank account.
4. Submit the UIN to your lending bank, which will charge interest at the reduced rate (after the 2.75% subvention) on the eligible export credit.
5. The bank claims reimbursement from the RBI; you monitor that the benefit has been correctly passed on in your loan account and stays within the Rs 50 lakh annual cap.

Why the scheme matters for exporters

For a small exporter, the cost of working capital is often the difference between winning and losing an order. Pre-shipment credit funds the raw materials and production before any money comes in from the buyer, and post-shipment credit carries the receivable until the overseas payment lands, sometimes months later. A 2.75% reduction in the interest rate on that credit directly improves an MSME exporter's margin and competitiveness.

Because the scheme is a pilot operated through the RBI, its rate, positive list of HSN codes and detailed operational rules are expected to evolve. The rate in particular is reviewed twice a year, so an exporter should treat 2.75% as the current figure rather than a permanent one.

Help and where to verify

• DGFT toll-free helpline: 1800-111-550 or 1800-572-1550
• DGFT portal: dgft.gov.in, for the trade notice, positive list of HSN codes and the online declaration
• Your lending bank: for how the subvention is applied to your export-credit account and the RBI reimbursement process

Because this is a pilot scheme with a bi-annually reviewed rate and a periodically revised positive list, exporters should confirm the current rate, the eligible HSN codes and the operational procedure on the DGFT portal, or with their bank, before relying on the benefit.