India removes growth penalty, boosts credit flow in export scheme

The Directorate General of Foreign Trade’s (DGFT) Trade Notice No. 22/2025–26 dated January 16, 2026, amends the guidelines for Interest Subvention Support for pre- and post-shipment export credit under the Export Promotion Mission – Niryat Protsahan and is widely seen as MSME-friendly.

Earlier, exporters faced an abrupt withdrawal of benefits once they crossed MSME thresholds, often at a stage when working-capital needs rose sharply. The three-year transition window now provides continuity and predictability, reducing the fear of scaling up and supporting capacity expansion.

The notification also clarifies that revised interest subvention rates will apply only to export credit sanctioned after the date of notification, while existing loans will continue under the rates applicable at the time of sanction. This removes retrospective uncertainty and protects exporters’ financial planning.

In another growth-supportive move, the DGFT has confirmed that for fiscal 2025–26, the full annual interest subvention ceiling will apply regardless of when export credit is sanctioned or utilised during the year, benefitting MSMEs that access finance mid-year.

By linking subvention to the actual interest cost borne by exporters, while simplifying reimbursement mechanisms for banks, the revised framework aims to ease working-capital pressure and improve credit flow. Overall, the notification signals a clear policy shift—from limiting benefits based on size thresholds to supporting MSMEs as they grow into larger, export-driven enterprises.

ALCHEMPro News Desk (KUL)