EPM
Interest subvention for exporters
Niryat Protsahan 2.75% interest subvention on export credit. Eligibility, how to claim, why the Interest Equalisation Scheme no longer applies, and a real savings calculation.
By Aaryan Kakani · · 4 min read
What Is Interest Subvention?
Interest subvention is a government subsidy on the interest charged on export credit (pre-shipment and post-shipment loans). The government reimburses a portion of the interest to your bank, and the bank passes the reduced rate to you.
Under the Export Promotion Mission (EPM), the interest subvention component is called Niryat Protsahan . It replaces the earlier Interest Equalisation Scheme, which ran from 2015 and has lapsed. It is a different scheme on different terms, not a continuation of the old one at a new rate. Do not carry an IES-era rate, coverage rule or cap across.
Evolution of interest subvention
| Scheme | Period | MSME rate | Non-MSME rate |
|---|---|---|---|
| Interest Equalisation (IES) | 2015. Lapsed | 2% (later 3%) | 2% (selected HS codes) |
| Niryat Protsahan (EPM) | Current. Confirm with your bank | 2.75% | Not eligible on the same terms |
Current subvention rates
Niryat Protsahan subvention rates
| Category | Subvention | Base rate | Effective rate |
|---|---|---|---|
| MSME manufacturer-exporter | 2.75% | ~8.65% | ~5.90% |
| Non-MSME manufacturer | Confirm with your AD bank. Do not assume the old IES non-MSME rate carries over | ||
| Merchant exporter | Confirm with your AD bank. May depend on MSME registration |
Base rate = MCLR/EBLR + spread, typically 8.50-9.00%. Subvention applies to rupee export credit, not PCFC. The MSME rate above is the one figure secondary sources agree on; every other cell here needs your bank's written confirmation.
Who is eligible
Eligibility requirements
- Valid IEC (Import Export Code)
- Export credit facility (pre-shipment or post-shipment) from a scheduled commercial bank
- Credit must be in Indian Rupees. PCFC and foreign currency loans are excluded
- Account must not be classified NPA at the time of claiming subvention
- For the 2.75% MSME rate: valid Udyam registration linked to your bank account
Do not assume the scheme is open to every exporter. Eligibility is narrower than the old IES on more than one axis (MSME status, registration, and covered product lines all bear on it) and a non-MSME manufacturer or a merchant exporter without Udyam may get nothing at all. Confirm your own position with your AD bank before you count on the benefit.
How the subvention flows
The subvention is not something you apply for separately. It flows automatically through the banking system. Here's the chain:
Subvention flow
- 01 You avail pre-shipment or post-shipment rupee export credit from your AD bank
- 02 Bank charges you the full base rate (MCLR/EBLR + spread, ~8.65%)
- 03 Bank submits a quarterly claim to RBI for the subvention amount on all eligible credit
- 04 RBI reimburses the bank at the rate applicable to your category
- 05 Bank credits the subvention to your loan account , reducing effective interest
Ensuring you get the benefit
The subvention is supposed to be automatic, but in practice many exporters miss it. Here's a checklist to make sure you're actually receiving the benefit:
Action checklist
- Verify your credit type. Only rupee export credit qualifies. Not PCFC, not working capital, not term loans. Ask your bank to confirm your facility is classified as "export credit" in their system.
- Link Udyam to your trade account. For the 2.75% rate, submit your Udyam registration certificate to the trade finance desk (not just the branch). Ask for written confirmation that it's linked.
- Check your interest certificate quarterly. The interest certificate (Form 16A equivalent for loans) should show the subvention as a separate line item or as a reduced effective rate.
- Compare effective rate. Calculate: (total interest charged − subvention credited) ÷ average outstanding × (365/days). If the effective rate is above 6.5% for an MSME, something is wrong.
- Escalate if missing. Write to the trade finance head (not just the branch manager). Reference the RBI Master Circular on Export Credit and the EPM notification. Banks that don't pass through the subvention face RBI audit queries.
Caps and exclusions
What is excluded
| Exclusion | Why |
|---|---|
| PCFC (Packing Credit in Foreign Currency) | Already priced at LIBOR/SOFR + spread (~4-5%), cheaper than rupee credit |
| Foreign currency post-shipment credit | Same reason. Already at international rates |
| NPA accounts | RBI regulation. No subsidy on non-performing assets |
| Credit beyond RBI-prescribed tenor | Pre-shipment >360 days, post-shipment >180 days (or >365 days for specific sectors) |
| Overdue export credit | Past the FEMA 9-month repatriation deadline |
Per-exporter caps
There is an annual cap per IEC, and you must get the figure from your AD bank or the scheme notification rather than from any published summary, including this one . Secondary sources circulating for this scheme disagree with each other by more than an order of magnitude, and the cap is the one number that decides whether it binds on your facility at all. If a summary tells you the ceiling sits comfortably above your credit limit, treat that as unverified until your bank confirms it in writing.
Real savings calculation
Example: MSME textile exporter
| Annual export turnover | Rs 5 crore |
|---|---|
| Average export credit outstanding | Rs 2 crore |
| Base interest rate (MCLR + 0.15%) | 8.65% p.a. |
| Annual interest without subvention | Rs 17,30,000 |
| Niryat Protsahan subvention (2.75%) | −Rs 5,50,000 |
| Effective interest cost | Rs 11,80,000 |
| Annual saving | Rs 5,50,000 |
Rs 5.5 lakh per year on Rs 2 crore of credit, for an MSME manufacturer-exporter at 2.75%. Enough to fund a trade fair booth or a new quality testing setup. Check the annual cap per IEC with your bank before you extrapolate this across a larger facility or several years.
Seasaw automates this
Track every incentive you're entitled to
Seasaw monitors your export credit, EDPMS entries, and incentive claims in one dashboard. See whether your bank is applying the subvention correctly, track RoDTEP and drawback status, and never leave money on the table.
Sources & citations
- Export Promotion Mission (EPM) Cabinet approval notification, 2026..
- RBI Master Circular on Rupee/Foreign Currency Export Credit and Customer Service to Exporters (updated annually)..
- DGFT Public Notices on Niryat Protsahan eligibility..
- Ministry of Commerce press briefings on EPM implementation. ECGC NIRVIK scheme guidelines.
Update history
- First published.