The MSME segments of various export-oriented industries, including gems and jewellery will receive a boost as a result of the approval given by The Cabinet Committee on Economic Affairs to include merchant exporters under the Interest Equalisation Scheme (IES) for Pre and Post Shipment Rupee Export Credit.

A government release stated that this will allow them an interest equalisation rate of 3% on such credit for export of products covered under 416 tariff lines identified under the scheme. These products are largely in MSME/ labour intensive sectors.

Inclusion of merchant exporters in the scheme is expected to make them more competitive, encouraging them to export more products manufactured by MSMEs adding to country's exports. Additional exports by them will increase production by MSME giving a fillip to employment generation as MSME are generally in the employment intensive sectors.

The government estimates that the proposal will entail benefits of around Rs 600 crore to exporters on interest equalisation, for the remaining period of the scheme.

The release stated that the present scheme, which is in-force from 1.4.2015 for five years, provides interest equalization rate of 3% on Pre and Post Shipment Rupee Credit tor all manufacturing exporters exporting identified 416 four digit tariff lines and 5% on all merchandise products manufactured and exported by MSMEs. Merchant exporters were hitherto not covered under the scheme.

Merchant exporters play an important role in finding overseas markets, getting export orders, communicating to MSME manufacturers the current preferences, trends and demand for products in international export markets, the government announcement said.

It added that they also play a pivotal role in exports of MSME manufacturers as MSME manufacturers export significant quantity of products through merchant exporters. High cost of credit equally impact their competitiveness also as they factor the high interest costs in their export costing.