Interest Equalisation Scheme explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Most export schemes give a benefit after the shipment. This one reduces the cost of the money before it — three percentage points off the interest on pre- and post-shipment rupee export credit, applied by the bank at the point of lending.
The Interest Equalisation Scheme (IES) "was established to provide exporters with a competitive advantage in the interest rates charged by banks on their Pre and Post Shipment Rupee Export Credits." It commenced 1 April 2015 for five years and was extended until 31 March 2024, then on short extensions. The rate is 3% per annum, raised to 5% for MSME sector manufacturers from 2 November 2018. It covers 416 identified tariff lines at four digits, and all export lines for MSME manufacturer exporters.
How the benefit reaches the exporter
Upfront, at the bank. "Every exporter eligible under the scheme has the option to avail upfront benefit of interest subvention from the bank."
And is reimbursed backwards. "the amount given as subvention in the interest rate to the exporters is reimbursed to the RBI by the Department of Commerce for its onward release to the concerned Scheduled Commercial Banks and Urban Cooperative Banks."
The chain runs exporter ← bank ← RBI ← Department of Commerce, which is why the scheme's continuation depends on budgetary allocation rather than on a notification alone.
The division of roles: "The scheme is implemented by the Reserve Bank of India with the support of banks. The Department of Commerce and Financial Services plays a limited role… primarily responsible for making and approving the scheme and providing consolidated reimbursement of benefits to the RBI."
Who gets what
| Category | Rate | Coverage |
|---|---|---|
| Exporters of goods under 416 identified tariff lines (four-digit) | 3% | Those tariff lines only |
| MSME sector manufacturer exporters | 5% from 02.11.2018 | All export lines |
| Merchant exporters, from 02.01.2019 | 3% | The same 416 tariff lines |
Two distinctions worth holding.
MSME manufacturers get both a higher rate and wider coverage. 5% instead of 3%, and all export lines rather than 416 tariff lines — a deliberate double preference.
Merchant exporters got in later, and only partly. Their inclusion, "in response to the demand of Merchant exporters" approved on 2 January 2019, gave them the 3% rate on the 416 identified tariff lines — not the MSME rate, and not the wider coverage.
What the scheme covers
Pre-shipment credit funds the manufacture or procurement of goods before export — packing credit.
Post-shipment credit funds the period between shipment and realisation of proceeds.
Both are rupee credits. The scheme does not touch foreign-currency export credit, where the rate is already benchmarked internationally.
The economic logic is that Indian exporters compete against firms borrowing at materially lower rates in their own markets, and a subvention on working capital narrows that gap without being an export subsidy on the goods themselves.
The extensions, and the cap
The scheme ran from 1 April 2015 for five years, was extended until 31 March 2024, and then continued on short extensions.
"The scheme has been extended for a period of three months, until December 31, 2024. An additional condition has been imposed that the fiscal benefits to each Micro, Small and Medium Enterprises (MSEs) will be restricted to ₹50 lakhs for the financial year 2024-25 until December 2024, as per DGFT Trade Notice 18/2024-2025 dated September 30, 2024."
Two things follow for anyone planning around the scheme.
Its continuation is not assumed. A scheme running on three-month extensions cannot be built into a multi-year pricing model, and the Handbook records no extension beyond 31 December 2024.
The ₹50 lakh cap is per enterprise, per financial year. An MSE reaching it mid-year pays full rates on further borrowing, so the effective subvention on a large working-capital line is materially less than 5%.
Anyone relying on the scheme should verify its current status with the RBI and DGFT before pricing it in.
Where it sits among the other schemes
IES is the only one of the FTP-adjacent schemes that reduces financing cost rather than tax or duty cost. Its natural companions are the credit-side facilities rather than the remission schemes:
The Gold Card Scheme "extends credit facilities to eligible exporters, including those from the small and medium sectors. It offers benefits such as automatic credit limit renewal and relaxed security requirements."
The ECGC Policy protects against commercial risks — buyer insolvency, protracted payment delays, repudiation of contract — and political risks — war and civil disturbance, new import restrictions or cancellation of import licences, transfer delays due to currency restrictions. And it feeds back into financing: "With an ECGC Policy, banks have greater confidence that the exporter will be able to recover the payment. As a result, banks can extend better financing (like packing credit and post-shipment credit) to the exporter."
And APEDA's Financial Assistance Scheme supports agri-product exporters "from 2021-22 to 2025-26" with aid "for infrastructure and quality development, including packhouses, cold storage, pre-shipment treatment facilities, lab equipment, and quality management systems."
Read together, these four address different constraints — the cost of credit, access to credit, the risk of non-payment, and the physical capacity to meet quality requirements. MAI and TMA →
Key takeaways
- IES reduces interest on pre- and post-shipment rupee export credit, taken upfront at the bank.
- 3% per annum generally; 5% for MSME sector manufacturers from 02.11.2018.
- 416 identified four-digit tariff lines; MSME manufacturers get all export lines.
- Merchant exporters were included from 02.01.2019, at 3% on the 416 tariff lines.
- Commenced 01.04.2015, extended to 31.03.2024, then on short extensions; the Handbook records extension only to 31 December 2024.
- DGFT Trade Notice 18/2024-2025 capped MSE benefit at ₹50 lakh for FY 2024-25.
- Implemented by the RBI with banks; Department of Commerce reimburses the RBI, which releases to Scheduled Commercial Banks and Urban Cooperative Banks.
- Related credit-side facilities: the Gold Card Scheme, the ECGC Policy, and APEDA's Financial Assistance Scheme (2021-22 to 2025-26).
Read next
- MAI and TMA: Market Access and Freight Assistance
- RoSCTL for Apparel and Made-Ups
- Status Holder Scheme: Thresholds, Privileges and Double Weightage
Disclaimer: Positions stated as on 5 September 2026, based on the Interest Equalisation Scheme as implemented by the Reserve Bank of India, DGFT Trade Notice 18/2024-2025 dated 30 September 2024, and the ECGC and APEDA scheme descriptions, as reproduced in the ICAI Handbook on Foreign Trade Policy – Incentives, Schemes & Related FAQs (November 2025, 2nd Edition). The scheme's current operational status should be verified with the RBI and DGFT before being relied upon.
Key Facts About Interest Equalisation Scheme
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What rate of interest subvention does IES give?
3% per annum on pre- and post-shipment rupee export credit, and 5% for MSME sector manufacturer exporters since 2 November 2018.
Which exports are covered?
416 identified tariff lines at the four-digit level — and, for MSME manufacturer exporters, all export lines.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Interest Equalisation Scheme: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.