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.

How to check your application status

There is no separate "application" that sits pending approval the way a scholarship or a subsidy portal application does. The interest subvention is applied by your bank directly to your export-credit account, so checking status means checking three different places rather than tracking one file number.

1. Check your UIN status on the DGFT portal

• Log in to the DGFT portal at dgft.gov.in with your IEC credentials.
• Look up the online declaration you filed for interest subvention and confirm the Unique Identification Number (UIN) generated against it is active and correctly linked to the bank account you are drawing export credit from.
• If the declaration shows as pending or rejected at this stage, the fault usually lies in a mismatch between the IEC, the Udyam registration details and the bank account you entered, and you will need to refile the declaration with corrected details.

2. Check the interest actually charged in your loan account

• The real proof that the subvention is active is in your bank statement or loan account ledger for the pre-shipment or post-shipment credit facility, not in a DGFT dashboard.
• Ask your bank's trade finance or export credit desk to show the interest rate applied before and after the subvention, and confirm it reflects the current 2.75% per annum reduction.
• Because the bank is expected to pass on the benefit upfront rather than refund it later, a loan account still being charged the full, non-subvented rate several weeks after your UIN was issued is a sign something has not been linked correctly on the bank's side.

3. Track your cumulative benefit against the Rs 50 lakh cap

• Ask your bank to share a running total of the interest subvention claimed on your account for the financial year.
• Firms exporting across multiple products or drawing credit from more than one bank should keep their own record, because the Rs 50 lakh annual cap applies per firm, not per loan account or per bank.
• Once the cumulative benefit for the year reaches the cap, the bank will stop applying the subvention on new disbursements until the next financial year, so a sudden increase in your effective interest rate partway through the year is not necessarily an error.

4. Escalate through the DGFT helpline or your Regional Authority

• If the UIN is active, your product's HSN code is confirmed on the positive list, and the bank still has not applied the reduced rate, first raise it in writing with the bank's trade finance branch.
• If the bank cannot resolve it, call the DGFT toll-free helpline (1800-111-550 or 1800-572-1550) or approach your jurisdictional DGFT Regional Authority, quoting your IEC and UIN.
• Because the scheme is running as an RBI-administered pilot, disputes over reimbursement timing between the bank and RBI are between those two institutions; an exporter's practical recourse is to keep pressing the bank, since it is the bank, not RBI, that owes the exporter the reduced rate.

There is no SMS-based or standalone mobile tracking system for this scheme. The DGFT portal and your bank's export credit desk are the only two channels that matter.

Common reasons for rejection

Most exporters who are turned down for the interest subvention are not rejected outright by a portal; instead their online declaration is either not accepted or the bank never applies the reduced rate. The underlying reasons are specific and mostly fixable before you file.

1. Your product's HSN code is not on the notified positive list

This is the single most common reason a claim goes nowhere. The subvention applies only to goods whose HS six-digit tariff code appears in the current positive list (Annexure-II of the DGFT trade notice), which runs to a few thousand lines and excludes some categories outright, such as steel products. Exporters often assume that because their broader product category is covered, every HSN code under it qualifies, when in fact one closely related six-digit code can be included while the one they actually export under is not.

Fix: Look up your exact six-digit HSN code against the current Annexure-II before filing anything, not just the general product description. If your code is not listed, no amount of correct paperwork elsewhere will make you eligible, and there is no exception or appeal route for an unlisted code; you can only wait for a periodic review to potentially add it.

2. Udyam registration or IEC details do not match

The declaration links your IEC, your Udyam (MSME) registration and your bank account. If the entity name, address or category recorded under Udyam does not match what is registered against your IEC, or if your Udyam registration has lapsed, been downgraded out of the MSME category, or was never completed, the declaration will not go through cleanly.

Fix: Confirm your Udyam registration is current and that the business name and details match your IEC record exactly before filing. A firm that has grown past MSME turnover or investment thresholds and no longer holds valid Udyam classification is no longer eligible under this scheme, since the current pilot is restricted to MSME manufacturer and merchant exporters.

3. The export credit was disbursed before the scheme's effective date

The current scheme is admissible only on rupee export credit disbursed on or after 2 January 2026. Exporters sometimes try to claim subvention retroactively on credit drawn under the old, lapsed Interest Equalisation Scheme, or in the gap period between the old scheme lapsing on 31 December 2024 and the new one starting.

Fix: There is no retroactive relief for credit disbursed in that gap window or under the terms of the old scheme. Only credit disbursed from the new scheme's effective date onward qualifies, so check the disbursement date on your loan account, not the date you filed the declaration.

4. Bank account linked to the UIN does not match the export credit account

The subvention has to be applied to the specific account where the pre-shipment or post-shipment credit sits. If the UIN is generated against a different bank account than the one your export credit facility is actually drawn from, for example a current account rather than the cash credit or packing credit account, the bank has no basis to apply the reduced rate.

Fix: Confirm with your bank's export credit desk exactly which account number the subvention needs to be linked to before filing the online declaration, and use that account number, not a general operating account.

5. Annual cap already exhausted

A firm that has already drawn Rs 50 lakh of subvention benefit in a financial year gets nothing further in that year, no matter how compliant the rest of the claim is. Exporters running credit facilities across multiple banks sometimes lose track of the combined total.

Fix: This is not a rejection to contest since the cap is a hard limit by design; the only remedy is to plan cash flow for the remainder of the year without the subvention, and resume claiming once the new financial year begins.

6. Claiming alongside a conflicting benefit on the same credit

The scheme guidelines exclude exporters who are availing certain other overlapping subsidy or interest-support benefits on the same export credit facility, to prevent double-dipping.

Fix: If your firm already receives interest support on the same credit line from another government scheme or a state-level export incentive, check with your bank and DGFT Regional Authority whether the two are mutually exclusive before assuming both will stack.