How To Utilize Interest Equalization Scheme To Boost Your Export Business

by | Feb 16, 2024

Interest Equalisation Scheme for All Exporters

Interest Equalization Scheme:

The Interest Equalization Scheme was first announced on 1st April 2015 by the Government of India to provide pre- and post-shipment Rupee export credit to eligible exporters. It is also known as interest subvention. A rebate of interest is provided to exporters on RPC/EPC and FBILL limits. Under this scheme, exporters can claim a reimbursement from the Reserve Bank of India.

Qualification for the Interest Equalization Program

To benefit from this program, the exporter must make the goods by the definition of “manufacture” under the FTP. The following exporters are eligible for the Interest Equalization Scheme:

  • Exporters of goods from manufacturers who come under the designated 416 four-digit tariff line.
  • All exporters of Micro, Small, and Medium-Sized Enterprises (MSMEs); 
  • Merchant exporters who fall under the defined 416 four-digit tariff line;
  • All exporters of Micro, Small, and Medium-Sized Enterprises (MSMEs) and Merchant Exporters who come under the defined 416 four-digit tariff lines have been included in this program as of January 2, 2019. 

Note: This program does not apply to merchant exporters outside the 416 tariff lines.

Benefits of Interest Equalization Scheme for export credit

  • Provide international identification to the export sectors.
  • Helps in increasing export competition
  • Provide pre-and post-shipment export credit to exporters at a lower rate to the eligible exporters
  • Enhance export performance
  • Help exporters by providing credit to grow their business which results in increased exports.


Rate of Interest Equalization
  • The scheme’s initial implementation, which lasted for five years starting on April 1, 2015, used an equalization rate of 3% annually. The Scheme may be changed or amended at any moment by the Government.
  • The Indian government agreed to raise the interest equalization rate between 3% to 5% on November 2, 2018.
  • The Indian government agreed to add merchant exporters as well on January 2, 2019. They are eligible for interest equalization at a rate of 3% on credit for the export of goods covered by the 416 tariff lines designated under the Interest Equalisation Scheme for Pre- and Post-Shipment Rupee Export Credit, which is still in effect.
  • The circular states that the Indian government has prolonged the Interest Equalisation Scheme from April 1, 2020, through March 31, 2021, with identical scope and coverage.
  • By RBI Circular No. 2021-22/21 dated April 12, 2021, the Government of India has extended the Interest Equalisation Scheme for pre- and post-shipment Rupee export credit for three more months, or till June 30, 2021, with the same scope and coverage.
  • According to RBI Circular No. RBI/2021-22/65, issued July 1, 2021, the Indian government has prolonged the Interest Equalisation Scheme for an additional three months, up to September 30, 2021, with unchanged scope and coverage. 
  • According to Circular No. RBI/2021-22/180 dated 08.03.2022, the Government of India granted the extension of the Interest Equalisation Scheme for Pre- and Post-Shipment Rupee Exports The credit is through March 31, 2024, or until further review, whichever is earlier. However, the interest subvention has been reduced from 5% to 3%. The additional period begins on the first of October 2021 and lasts until March 31, 2024.


Below is a list of the most recent changes the Government has made to the Scheme.

  • The “Telecom Instruments” sector, which has six HS lines1, would not be able to use the Scheme, except for MSME manufacturer exporters.
  • Beneficiaries who are receiving benefits under another government Production Linked Incentive (PLI) program are not eligible for the expanded Scheme.
  • Between October 1, 2021, and March 31, 2022, banks must identify the eligible exporters by the Scheme, credit the accounts with the allowable amount of interest equalisation, and submit an industry-specific consolidated reimbursement claim to the Reserve Bank by 30 April 2022.
  • Beginning on April 1 of 2022, banks must cut the interest rate they charge eligible exporters ahead of the regulations and submit the original claims within 15 days of the end of the relevant month, stamped with the bank’s seal and verified by an authorised individual, in the format specified.
  • After excluding 6 HS lines in the telecom sector, the prevailing interest subvention rate is 3% for MSME manufacturer exporters exporting under any HS lines and 2% for manufacturer and merchant exporters exporting under 410 HS lines.
  • Most significantly, to qualify for upfront interest subvention beginning on April 1, 2022, every exporter must get a UIN from the DGFT and submit it to their banks.

The recently launched digital IT module for the Interest Equalisation Scheme’s UIN/UDIN generation process involves:

Effective 01.04.2022, a Unique IES (Interest Equalisation scheme) Identification Number (UIN) must be provided to the relevant bank to receive Interest Equalisation against pre- and post-shipment rupee export credit applications. 

Steps for applying UDIN 

  1. First, register on the DGFT Website The applicant IEC is linked to its online account, IEC (ANF-2A) and Exporter-Importer Profile (ANF-1) is updated to reflect the correct and latest details.
  2. Login with registered credentials navigate to services > Interest Equalization Scheme> apply for Interest Equalization Scheme and fill in the required details.
  3. Rs.200 is to be paid online for UIN.
  4. An acknowledgement containing UIN would be auto-generated when the completed application is submitted online.
  5. An SMS and email intimation of UIN will be sent to a registered email account and mobile number of the exporter.
  6. After UIN generation, no changes will be allowed. The exporter has to generate a new UIN for correcting the application.
  7. Exporter has to submit UIN to their concerned bank for getting the benefit of IES.
  8. UIN has a validity of 1 year from the date of registration it is valid on all pre- and post-shipment credits availed till 31.03.2023.

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