The commerce department has proposed giving rupee credit to exporters at around 7.5% rate of interest and dollar-denominated loans at around 3.5% under the proposed scheme.
It will soon take a proposal to the cabinet.
“A cabinet note is in the works. We are in talks with the finance ministry,” said an official.
The scheme could be a reimbursement to the banks like interest subvention. Exporters said rupee loans at present are extended at 9.5-10% rate of interest while dollar credit is given at 5.5-6%.
“The move will help exporters provided there is no further loading of expenses,” said Ajay Sahai, director general, Federation of Indian Export Organisations.
India’s exports declined for the fifth month in a row at 1.8% in December to $27.36 billion as 19 of the 30 exporting sectors showed a decline in outbound shipments. In April-December of FY20, exports slipped 1.96% to $239.29 billion and imports declined 8.9% to $357.39 billion, leaving a trade deficit of $118.10 billion.
However, experts said many small exporters are comfortable with rupee credit especially with bank branches in smaller cities offering rupee loans.
Export credit disbursement declined 23% in 2018-19 to Rs 9.57 lakh crore from Rs 12.39 lakh crore in 2017-18.
Separately, to ease the liquidity crunch, the commerce and industry ministry
has also prepared a plan to reduce insurance premium rates to 0.6% for small exporters having an outstanding limit of less than Rs 80 crore.