Mumbai: In order to encourage exports, RBI on Tuesday directed the urban co-operative banks to extend interest subvention of 2 percent for exporters in segments like handicraft, carpets, SMEs and certain engineering goods, by one year till March 2014.
"...It has also been decided to extend the interest subvention of 2 percent on rupee export credit on specified export sectors from April 1, 2013 to March 31, 2014," the apex bank said in a notification on Tuesday.
"Accordingly, the interest subvention on pre-shipment and post-shipment rupee export credit is extended from April 1, 2013 to March 31, 2014," it added.
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.
Exports are on decline for the past eight months. The contraction was 1.92 percent in December 2012 to USD 24.8 billion.