Chemical exporters want IES extended

Ahmedabad: With the govt yet to extend the Interest Equalisation Scheme (IES) after Dec 31, 2024, chemical exporters say they are facing a tough time as this has affected their competitiveness, which could result in lower international shipments. IES was formulated to provide benefit in interest rates being charged by banks to exporters on their pre- and post shipment rupee export credits, said Ankit Patel, former president of the Vatva Industries Association (VIA). He added, "IES is an important instrument to promote Indian exports, especially in sectors that need financial support to remain competitive in the global marketplace. India has higher interest rates than most of the developed countries, and the scheme was introduced to help Indian exporters remain competitive. Chemicals exporters used to get 3-5% incentives under IES. This scheme ended on Dec 31, 2024, but has not been extended since. This has dented their global competitiveness."According to sources, IES is intended at offsetting the high cost of borrowing for Indian exporters and ensuring that they are not at a financial disadvantage compared to their counterparts from other countries. "The chemical exports sector faces considerable financial challenges due to fluctuating raw material costs, supply chain disruptions, production processes, and increasing competition from other countries. The extension of the IES scheme for another five years beyond Dec 31, 2024, would help Indian chemical exporters to address their financial constraints and remain competitive in the global market," said Patel.