Exporters represented by the Federation of Indian Export Organisations (FIEO) have asked the government to lift the cap on the interest subvention and to revise the scheme for greater relief.
The appeal matters because Indian exporters contend that the existing support is insufficient to offset higher borrowing costs, volatile demand, and rising global trade risks, which could curb the country’s export growth.
FIEO and its member firms argue that the cap on the interest subvention, introduced as part of a Rs 7,295‑crore export support package, limits the amount of credit assistance available to small and medium‑size exporters. The package includes a Rs 5,181‑crore interest subvention component and a Rs 2,114‑crore collateral support component[1].
Industry leaders said the cap, which ties the subsidy to a fixed ceiling per borrower, leaves many firms with only partial relief, forcing them to seek costlier private financing. "The cap prevents exporters from accessing the full benefit of the scheme, especially when interest rates are rising," a senior FIEO official said.
Exporters also point to recent global trade disruptions and fluctuating commodity prices as factors that have heightened the need for more flexible credit support. They note that without an expanded subvention, export‑oriented companies may struggle to maintain margins and could shift production to markets with more favorable financing conditions.
The government’s original package was announced to improve exporters’ access to credit and to bolster India’s trade balance. However, stakeholders said the design of the interest subvention does not reflect the current macro‑economic environment, where borrowing costs have risen sharply since the scheme’s inception.
In response, the Ministry of Commerce has indicated it will review the feedback, though it has not yet committed to any specific policy change. The outcome of that review will likely influence the sector’s ability to compete internationally and could affect India’s export performance in the coming fiscal year.
**What this means** – If the cap is removed or the subsidy structure is broadened, exporters could secure cheaper financing, supporting higher export volumes, and helping to offset trade headwinds. Conversely, maintaining the status quo may constrain the sector’s growth and diminish India’s share in global markets.
“The cap prevents exporters from accessing the full benefit of the scheme, especially when interest rates are rising.”
Lifting the interest‑subvention cap would likely lower financing costs for exporters, enabling them to sustain or increase shipments despite higher global trade risks; keeping the cap may limit growth and reduce India’s export competitiveness.
