Interest Equalisation Scheme (IES): Status in 2026 and What Replaced It

No. IES ran from 1 April 2015 and was extended repeatedly through trade notices and RBI circulars. From 1 July 2024 fresh benefits were restricted to MSME manufacturer exporters only, cutting out merchant exporters and non MSME exporters of the 410 identified tariff lines. The final extension carried it to 31 December 2024 with an aggregate benefit capped at Rs 50 lakh per MSME for FY 2024-25. It has not been revived. Anyone telling you otherwise is working from stale material.

It reduced the interest rate an exporter paid on rupee export credit. The bank applied the reduction upfront at disbursement and then claimed the differential back from the RBI, so the exporter never filed with a government body directly. In its final structure the rate was 3 percent per annum for MSME manufacturer exporters across all HS lines and 2 percent for manufacturer and merchant exporters shipping under 410 identified tariff lines. It never applied to foreign currency export credit such as PCFC or EBR, and deemed exports and SEZ supplies were excluded.

Interest Subvention Support for Pre and Post Shipment Export Credit, one of the interventions under the Export Promotion Mission. It is being run on a pilot basis through the Reserve Bank of India, with DGFT operating the intent and monitoring layer. The objective language is deliberately different from IES: support is framed as relief on the cost of credit and is explicitly not linked to export performance, pricing or quantities exported. That framing exists to keep the intervention clear of prohibited export subsidy classification.

MSME manufacturer exporters and merchant exporters holding an active Importer Exporter Code that is not suspended, cancelled or on the Denied Entity List, together with a valid MSME Udyam Registration Number. Both are hard requirements. An exporter without a current Udyam number is outside the scheme regardless of turnover or track record.

The export must also fall within a notified positive list of tariff lines defined at HSN six digit level. The list runs to over four thousand lines, so most exporters are covered, but the check is on your specific six digit code rather than your broad sector. The list is reviewed periodically against parameters such as MSME participation and labour intensity, and it is not tied to any minimum export threshold.

2.75 percent per annum on both pre shipment and post shipment rupee export credit, available to Micro, Small and Medium enterprises alike. The maximum benefit is Rs 50 lakh per MSME exporter per financial year. Rates are reviewed on a bi annual basis, ordinarily in the last week of March and September, and the annual ceiling is reviewed separately, ordinarily in the last week of April. Additional support for exporters entering new geographies has been announced with detailed guidelines to follow.

This is the single most important operational difference from IES, and it is where exporters are losing the benefit right now.

Under the old scheme the benefit was largely automatic through your bank. Under the new one you have to file an online declaration of intent on the DGFT portal before you apply for the export credit. Filing generates a Unique Identification Number, which is linked to the bank account specified in your IEC profile and stays valid until the end of that financial year. You give the UIN to your lending bank, and the bank maps its subvention claims against it.

Each UIN corresponds to one lending bank. If you take export credit from two banks you need two UINs. If you take the credit first and file the intent afterwards, there is no mechanism to attach the benefit retrospectively. The sequence is the scheme.

You are, and this was clarified specifically. Where an exporter borrows from more than one lending institution, the responsibility for ensuring aggregate claims stay within the annual ceiling rests solely with the exporter, not with the banks and not with the RBI. Any excess claimed has to be voluntarily surrendered within the same financial year. Fail to surrender it and the amount becomes recoverable under the applicable rules. If you run credit lines across two or three banks, someone in your office needs to be tracking the running total.

Trade Notice 22/2025-26 dated 16 January 2026 tightened several points. Subvention is not admissible on deemed exports as defined under Chapter 7 of the Foreign Trade Policy 2023. It is not admissible where the export credit account turns non performing before the eligible export cycle completes. And revised rates, whenever they are notified, apply only to facilities sanctioned on or after the notification date, so an existing facility continues on the rate that applied when it was sanctioned.

You stay eligible. An exporter whose investment or turnover pushes them into a higher MSME category during the year continues to receive interest subvention support for three years from the date of reclassification, in line with Ministry of MSME Notification S.O. 4926(E) dated 18 October 2022, subject to meeting all other conditions. This is a meaningful protection for exporters in a growth phase and it is worth knowing before you decide whether to declare a reclassification.

Not for new credit. Claims relate to export credit sanctioned and disbursed inside the scheme window, and that window closed. If you had credit running in the final period and believe the benefit was not passed on correctly by your bank, that is a reconciliation question with the lender against the rate that applied at sanction, not a fresh claim to DGFT. Bring us the sanction letter and the interest workings and we will tell you whether there is anything to pursue.

Two more interventions under the Export Promotion Mission are worth knowing about. Support for Alternative Trade Instruments extends interest subvention on the interest cost element of export factoring, where the factoring is provided by entities recognised by the RBI or IFSCA, again against a notified positive list at HSN six digit level. Support for Emerging Export Opportunities provides risk sharing on non recourse credit mechanisms including standby letters of credit, risk participation, irrevocable reimbursement undertakings, letter of credit confirmation and negotiation, and usance payable at sight letters of credit, implemented through Exim Bank with NCGTC, aimed at under served markets.

If your problem is buyer payment risk rather than the cost of your own borrowing, the second one is likely the more useful lever.

Confirm your Udyam registration is current, because without it none of this is available. Check your product’s six digit HSN code against the notified positive list before you plan around the benefit. If export credit is coming in the next quarter, file the intent on the DGFT portal first and get the UIN before you approach the bank. If you borrow from more than one bank, start a running tally against the Rs 50 lakh ceiling now rather than in March. And confirm your IEC is active and that annual updation between 1 April and 30 June was completed, because a deactivated IEC takes every one of these benefits down with it.