What is the Interest Equalisation Scheme (IES)?
The Interest Equalisation Scheme, also known as the Interest Subvention Scheme for exporters, is a Government of India initiative to provide pre-shipment and post-shipment rupee export credit at competitive interest rates. Under IES, eligible Indian exporters and manufacturer exporters receive an interest rate subsidy on export loans from banks, reducing their cost of borrowing and making Indian goods more price competitive in global markets.
Launched by the Reserve Bank of India (RBI) and the Department of Commerce, the Interest Equalisation Scheme applies to all MSME manufacturer exporters across all ITC (HS) codes and to manufacturer/merchant exporters of 410 identified tariff lines. The scheme has been extended multiple times, with the latest extension valid through June 2024 and expected to continue under the Foreign Trade Policy 2023-28 framework.
Who is Eligible for the Interest Equalisation Scheme?
Eligibility under the IES depends on two categories:
Category 1: MSME Manufacturer Exporters – All MSME manufacturer exporters registered under Udyam are eligible for the interest subvention benefit on pre-shipment and post-shipment export credit, regardless of the product being exported. The rate of equalisation is 3% per annum for MSMEs (revised from 5% in earlier versions).
Category 2: Manufacturer and Merchant Exporters of 410 Tariff Lines – Exporters shipping products falling under the 410 identified ITC (HS) codes are eligible for a 2% interest equalisation per annum. These tariff lines cover sectors like textiles, handicrafts, carpets, engineering goods, leather, jute, agricultural products, and more.
Key eligibility conditions include: the exporter must have a valid IEC code, the export credit must be availed in Indian Rupees from scheduled commercial banks, the benefit is not available on export credit denominated in foreign currency (PCFC/EBR), and Deemed Exports and SEZ supplies do not qualify.
How Does the Interest Equalisation Scheme Work?
Banks extend the interest equalisation benefit upfront to exporters by reducing the applicable interest rate on export credit at the time of disbursement. The differential is then claimed by the bank from the RBI. Exporters receive the benefit automatically through their lending bank without filing a separate claim with any government body.
For example, if a bank charges 9% interest on an export packing credit facility and the exporter qualifies for 3% IES benefit, the effective interest rate for the exporter becomes 6%. This significantly reduces working capital costs for small and mid-size exporters who rely heavily on bank credit for fulfilling export orders.
Documents Required for IES Benefit
To avail the Interest Equalisation Scheme benefit, exporters typically need: a valid Importer Exporter Code (IEC), Udyam Registration Certificate (for MSME category), Shipping Bills showing ITC HS code of exported goods, export credit sanction letter from the bank, Bank Realisation Certificate (BRC) or eBRC, and GST registration. The lending bank handles the RBI claim process, so the exporter does not need to apply to any government agency directly.
Key Benefits of the Interest Equalisation Scheme for Indian Exporters
The IES delivers several tangible advantages. It reduces the effective cost of export finance by 2-3%, making Indian products more competitive against exporters from countries with lower interest rate regimes. For MSMEs, it bridges the interest rate gap between Indian bank lending rates and international borrowing costs. The benefit applies to both pre-shipment credit (packing credit) and post-shipment credit (bill discounting, negotiation), covering the entire export financing cycle.
The scheme directly impacts export pricing. When your cost of finance drops by 2-3 percentage points, you can offer more competitive prices to international buyers without sacrificing margins. This is especially critical in price-sensitive markets and for commodity exports where margins are thin.
How RASP International Helps with IES
At RASP International, we help exporters maximise their Interest Equalisation Scheme benefits through: verifying your eligibility based on Udyam status and ITC HS codes, ensuring your bank is correctly applying the interest subvention, resolving disputes where banks have not passed on the IES benefit, assisting with MSME Udyam registration for first-time exporters, cross-checking your shipping bills for correct HS code classification (incorrect codes can disqualify you from the benefit), and tracking policy changes and extensions to keep you informed about scheme continuity.
Many exporters lose IES benefits simply because their HS codes are incorrectly mapped or their bank is unaware of their eligibility. Our team ensures you capture every rupee of benefit you are entitled to.
Frequently Asked Questions about Interest Equalisation Scheme
Is the Interest Equalisation Scheme still active in 2026?
The scheme has been extended periodically. As of the latest update, the IES continues under the Foreign Trade Policy 2023-28 framework. Contact RASP International for the latest status and rates.
Can merchant exporters claim IES benefit?
Yes, merchant exporters can claim the benefit if the exported product falls under the 410 identified tariff lines. However, only MSME manufacturer exporters get the benefit across all product categories.
Does IES apply to export credit in foreign currency?
No. The Interest Equalisation Scheme only applies to rupee-denominated export credit. Pre-shipment Credit in Foreign Currency (PCFC) and Export Bills Rediscounting are excluded.
How do I know if my product qualifies for IES?
Check your product’s ITC (HS) code against the 410 identified tariff lines published by DGFT. If you are an MSME manufacturer exporter with Udyam registration, you qualify regardless of product category. RASP International can verify your eligibility within 24 hours.
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