Mumbai: With a view to encourage exports, the RBI Monday extended the 2 percent interest subsidy scheme for exporters in segments like handicrafts, carpets, SMEs and certain engineering goods, by one year till March 2014.
The RBI's notification said that it has been "decided to extend the 2 percent Rupee Export Credit Interest Rate Subvention Scheme...W.E.F. April 1, 2013 to March 31, 2014".
Other sectors which will be benefited from the extension of the scheme are, handlooms, readymade garments, processed agriculture products, sports goods, toys and 134 engineering good items (or tariff lines).
Under the scheme, banks would reduce the interest rate chargeable to exporters (as per Base Rate system) by the amount of subvention subject to a floor rate of 7 percent.
Earlier also, the interest subvention scheme was extended till March 31, 2013 on pre and post shipment rupee export credit for certain employment orientated export sectors.
Recently, the government decided to widen the scheme to include certain goods from the engineering sector.
The RBI notification said the "banks may ensure to pass on the benefit of 2 percent interest subvention completely to the eligible exporters".
Exports are on decline for the past eight months. The contraction was 1.92 percent in December 2012 to USD 24.8 billion.