The commerce ministry has asked its finance counterpart to enhance the rate of subsidy from 3 per cent to 5 per cent on credit provided to exporters, a senior official said today.
Directorate General of Foreign Trade (DGFT) Alok Vardhan Chaturvedi said that in the Union Budget 2018-19, the government has increased allocations for interest equalisation scheme to Rs 2,500 crore from Rs 1,000 crore earlier.
Under this scheme, the government provides 3 per cent interest subsidy to all MSME and labour intensive export sectors.
The (commerce) minister has taken up with the finance minister for increasing this interest subvention rate from 3 per cent to 5 per cent, Chaturvedi told reporters here.
He said that the cost of capital in India is much higher as compared to other countries.
Besides, infrastructure inefficiencies and logistics costs too are high as compared to India's competitors including Singapore and Malaysia.
Commerce and Industry Minister Suresh Prabhu said that products being sold in global markets need to be at a level playing field.
Interest subsidy to some extent neutralises infrastructure inefficiencies.
Prabhu also said that work is in progress to see ways to increase exports of goods and services to USD 1 trillion in the coming years.
On whether increase in customs duties on certain items could be seen as a protectionist measure, the minister said it is not, and India is one of the most open economies in the world.