What Is the Current Status of the Interest Equalisation Scheme for Exporters?
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
- Published:
- Last modified:
Short answer
The Interest Equalisation Scheme for exporters is no longer running. Its last extension ended on 31 December 2024. Since 2 January 2026, MSME goods exporters can instead get interest subvention of 2.75% a year on rupee export credit under the Export Promotion Mission. The benefit is capped at ₹50 lakh per exporter per financial year.
| Applies to | Governed by | Deadline | Penalty | Last verified |
|---|---|---|---|---|
| MSME manufacturer and merchant exporters with an active IEC and Udyam registration, exporting goods under a notified positive list of six-digit HS tariff lines | DGFT Trade Notice No. 20/2025-26 of 2 January 2026, as amended by later trade notices, and RBI circular RBI/2025-26/195 of 19 January 2026 | Generate the UIN on the DGFT portal within 15 days of the loan disbursal (from FY 2026-27); banks file monthly claims within 15 days of the month end | Subvention claimed above the ₹50 lakh annual ceiling or against ineligible tariff lines is recoverable; no subvention is paid from the date an account becomes an NPA | 8 Oct 2026 |
What was the Interest Equalisation Scheme for exporters, and what replaced the Interest Equalisation Scheme?
The Interest Equalisation Scheme (IES) gave an equalisation benefit on pre-shipment and post-shipment rupee export credit, and DGFT notices extended it in stages during 2024. The IES ended after 31 December 2024. New export credit is now covered by interest subvention under the Niryat Protsahan sub-scheme of the Export Promotion Mission (EPM), launched on 2 January 2026.
- Old scheme: DGFT notices called it the 'Interest Equalisation Scheme for Pre and Post shipment Rupee Export Credit'. The last extension ran up to 31 December 2024 (DGFT Trade Notice No. 18/2024-25).
- Final phase: From 1 July 2024 the IES was limited to MSME exporters, and claims of non-MSME exporters were not entertained beyond 30 June 2024 (Trade Notice No. 07/2024-25).
- New scheme: DGFT launched 'Interest Subvention for Pre- and Post-Shipment Export Credit' under the Niryat Protsahan sub-scheme of the Export Promotion Mission with immediate effect on 2 January 2026 (Trade Notice No. 20/2025-26).
- Rate: The subvention rate is 2.75% per annum on pre-shipment and post-shipment rupee export credit for micro, small and medium enterprises (Trade Notice No. 20/2025-26, para 2).
- Ceiling: One MSME exporter can receive at most ₹50 lakh of subvention benefit in a financial year (Trade Notice No. 20/2025-26, Appendix-A para 2(c)).
- Old UINs: A UIN obtained under the erstwhile IES cannot be used to pass subvention benefits under the EPM scheme (Trade Notice No. 33/2025-26, draft para X.4(f)).
People still search for the old name. When a bank or adviser mentions 'IES' in 2026, check whether they mean the EPM interest subvention, since that is the scheme banks can apply to new export credit today.
Who is eligible for EPM interest subvention on export credit?
EPM interest subvention is available to MSME manufacturer exporters and merchant exporters only. You need a valid, active IEC, a Udyam registration, and export credit for goods on the notified list of six-digit HS tariff lines. Large exporters and deemed exports are outside the scheme.
| Entity type | Applicable | Why | Best for |
|---|---|---|---|
| MSME manufacturer exporter | Yes | Eligible with an active IEC and Udyam registration, for credit against positive-list tariff lines (TN 20/2025-26, draft HBP para X.1(a)) | Small and medium factories exporting goods |
| MSME merchant exporter | Yes | The scheme applies to MSME manufacturer exporters and merchant exporters alike (TN 20/2025-26, para 2(iv)) | Trading firms that buy and export goods |
| Micro or small exporter of Chapter 72 iron and steel goods | Yes, from 20 April 2026 | 167 Chapter 72 tariff lines were added for micro and small enterprises only (Trade Notice No. 01/2026-27, Annexure-II A) | Small iron and steel exporters |
| Medium enterprise exporting Chapter 72 goods | No | The added Chapter 72 lines are eligible only for micro and small exporters (Trade Notice No. 01/2026-27) | Medium firms checking product coverage |
| Exporter that has outgrown its MSME category | Yes, for three years | Firms graduating out of their MSME category stay eligible for three years from re-classification (TN 22/2025-26, draft HBP para X.3(h)) | Growing exporters crossing MSME limits |
| Deemed exports supplier | No | Subvention is not admissible on deemed exports under Chapter 7 of FTP 2023 (TN 22/2025-26, draft HBP para X.3(f)) | Suppliers to domestic projects treated as exports |
| IEC holder on the Denied Entity List, or with a suspended or cancelled IEC | No | The IEC must be valid, active and outside the Denied Entity List (TN 20/2025-26, draft HBP para X.1(a)) | Exporters with IEC problems |
| Pure services exporter or freelancer | Check with your bank | Eligibility is tied to goods tariff lines at the HS six-digit level, and the intent form asks for an ITC (HS) code (TN 20/2025-26, para X.1(c) and Annexure-III) | Freelancers checking whether the scheme fits |
How does an MSME exporter claim EPM interest subvention on export credit?
An MSME exporter claims EPM interest subvention by filing an intent on the DGFT portal, which generates a Unique Identification Number (UIN), and giving that UIN to the lending bank. The bank passes the subvention upfront and claims reimbursement each month. You do not file a separate claim yourself.
- Update your IEC profile on the DGFT portal, including the bank account you borrow from. The UIN is linked to the bank account in your IEC profile (TN 20/2025-26, draft HBP para X.4(b)). See how to apply for an IEC code.
- Confirm your product's six-digit HS code is on the positive list in Annexure-II of Trade Notice No. 20/2025-26, or in Annexure-II A of Trade Notice No. 01/2026-27 for micro and small Chapter 72 exporters.
- Log in to the DGFT portal, open Services, select Export Promotion Mission (EPM), choose Apply for EPM Schemes, start a fresh application and pick 'Interest Subvention for Pre- and Post-Shipment Export Credit' (TN 20/2025-26, Annexure-III).
- Fill in the MSME details, loan details, one sector and its ITC (HS) code, and accept the declaration, which includes an undertaking that the subvention will not exceed ₹50 lakh in the financial year (TN 20/2025-26, Annexure-III).
- Generate the UIN within 15 days from the date of disbursal of the pre-shipment or post-shipment credit. From FY 2026-27 a UIN generated in that window is treated as valid and subvention runs from the disbursal date (Trade Notice No. 03/2026-27, para 3(b)).
- Give the UIN to your bank. The bank passes the subvention upfront and claims reimbursement monthly with an external auditor's certificate (TN 20/2025-26, Appendix-A paras 2(e) and 3(c)).
- Track your total subvention across all banks during the year. Keeping within the ₹50 lakh ceiling is your responsibility when you borrow from more than one bank (TN 33/2025-26, draft HBP para X.4(e)).
Do MSME exporters need separate UINs for pre-shipment and post-shipment credit under EPM interest subvention?
Yes. DGFT has clarified that a single UIN shall not be used for both pre-shipment and post-shipment benefits, and each facility uses its own UIN (Trade Notice No. 13/2026-27, clarification 4). Each UIN also maps to one lending bank, so borrowing from two banks means separate UINs for each (TN 20/2025-26, draft HBP para X.4(c)).
- Changing banks needs a new UIN, since UIN portability is not permitted (TN 33/2025-26, draft HBP para X.4(d)).
- A UIN stays valid until the end of the financial year it was issued for (TN 20/2025-26, draft HBP para X.4(b)).
- Claims must be filed against the UIN for the financial year in which the subvention is granted (TN 13/2026-27, clarification 5).
What happens to EPM interest subvention when an export loan runs across two financial years?
Subvention for the part of the loan falling in the new financial year needs a fresh UIN for that year. In DGFT's example, credit disbursed on 15 March 2026 and due on 10 June 2026 uses the FY 2025-26 UIN up to 31 March 2026, and the April to June 2026 interest needs a FY 2026-27 UIN (Trade Notice No. 13/2026-27, clarification 5).
Who processes bank claims for EPM interest subvention after 1 April 2026?
EXIM Bank is the implementing agency from 1 April 2026, handling portal management, verification and claim settlement. RBI ran the pilot and still processes supplementary claims for January to March 2026 (Trade Notice No. 17/2026-27, paras 2 and 3). RBI's circular of 19 January 2026 told lenders to extend the benefit strictly as per the scheme.
What are the rates, caps and deadlines under EPM interest subvention for exporters?
EPM interest subvention pays 2.75% a year on eligible rupee export credit, up to ₹50 lakh per exporter per financial year. The rate that applies is the one prevailing on the date of loan disbursal (Trade Notice No. 03/2026-27). For example, say a small exporter takes ₹20 lakh of pre-shipment credit for 90 days. At 2.75% a year the subvention is roughly ₹20,00,000 × 2.75% × 90 ÷ 365 = about ₹13,562. These are hypothetical numbers, and your bank's day-count method may differ.
| Item | Rule | Source | Best for |
|---|---|---|---|
| Subvention rate | 2.75% per annum on pre-shipment and post-shipment rupee export credit | TN 20/2025-26, Appendix-A para 2(a) | Estimating the saving on a loan |
| Annual ceiling | ₹50 lakh per MSME exporter per financial year, applied in full for FY 2025-26 without pro-rating | TN 20/2025-26 para 2(ii); TN 22/2025-26 para 2 | Exporters with large credit lines |
| Rate review | Rates reviewed twice a year, preferably in the last week of March and September; the rate applied is the one prevailing on the date of loan disbursal | TN 20/2025-26 draft HBP X.3(b); TN 03/2026-27 para 3(c) | Exporters planning new sanctions |
| Interest rate on the loan | Set by the lending bank at its commercial discretion; subvention applies on the interest cost actually borne | TN 22/2025-26, Appendix-A para 3(a) | Comparing bank offers |
| Start date | Only credit sanctioned on or after 2 January 2026 is eligible | TN 22/2025-26, para 3 | Exporters with older loans |
| UIN timing (FY 2026-27 onwards) | Within 15 days from the date of original disbursal | TN 03/2026-27, para 3(b) | Exporters drawing new credit |
| Bank claim timing | IEC-wise monthly claims online within 15 days of month end; for end-of-month disbursals, before the last date of the following month | TN 22/2025-26 Appendix-A 3(b); TN 13/2026-27 clarification 3 | Bank-side follow-up |
| Early repayment | Subvention applies only for the period the credit stayed outstanding | TN 33/2025-26, Appendix-A para 4(d) | Exporters prepaying loans |
What happens if an exporter breaks the EPM interest subvention rules?
An exporter who claims EPM interest subvention above the ceiling, or against ineligible tariff lines, must give back the excess and can face recovery and other action. The subvention also stops when the loan becomes a non-performing asset, and a late UIN can cost you the benefit on that disbursal.
- Excess claims: Any amount above the annual ceiling must be voluntarily surrendered within the same financial year, failing which it is liable for recovery (TN 20/2025-26, draft HBP para X.4(e)).
- Wrong products: Misutilisation or an incorrect claim against non-eligible tariff lines makes the exporter liable for recovery and other action (TN 20/2025-26, draft HBP para X.1(e)).
- NPA: No subvention is admissible from the date the loan account is classified as a non-performing asset (TN 33/2025-26, Appendix-A para 3(f)).
- Late UIN: Under the original rule, a UIN not generated on or before disbursal meant no subvention on that disbursal (TN 33/2025-26, draft HBP para X.4(d)). From FY 2026-27 the window is 15 days from disbursal (TN 03/2026-27).
- Declaration: The intent form declaration states that a violation of the undertaking may lead to penalties, legal action or withdrawal of subvention benefits (TN 20/2025-26, Annexure-III).
If you find you have crossed ₹50 lakh across banks, tell your banks and surrender the excess before the financial year ends. If you missed the UIN window, ask your bank in writing whether any relaxation applies to your disbursal, and keep copies of the trade notices it relies on.
Which DGFT and RBI notices govern the Interest Equalisation Scheme and EPM interest subvention?
DGFT trade notices set the rules for EPM interest subvention, and an RBI circular directs lenders to apply them. The IES history sits in older DGFT notices. Check the DGFT trade notice list for later changes.
| Circular or regulation | Clause | Date | Plain meaning | Best for |
|---|---|---|---|---|
| DGFT Trade Notice No. 40/2023-24 | Paras 1 and 2 | 20 March 2024 | IES extended to 30 June 2024 by RBI circular DOR.STR.REC.78/04.02.001/2023-24; cap of ₹2.50 crore per IEC for the April to June 2024 quarter | Reading IES history |
| DGFT Trade Notice No. 07/2024-25 | Paras 1 to 3 | 28 June 2024 | IES extended to 31 August 2024 for MSME exporters only, with a ₹750 crore outlay cap | Non-MSME exporters checking old claims |
| DGFT Trade Notice No. 17/2024-25 | Para 2 | 17 September 2024 | Annual net subvention capped at ₹10 crore per IEC, and ₹5 crore per IEC for MSME manufacturers till 30 September 2024 | Reading IES history |
| DGFT Trade Notice No. 18/2024-25 | Paras 1 and 2 | 30 September 2024 | Final IES extension to 31 December 2024, with a ₹50 lakh aggregate cap per MSME for FY 2024-25 | Confirming when IES ended |
| DGFT Trade Notice No. 20/2025-26 | Para 2, Annexures I to III | 2 January 2026 | Launches EPM interest subvention at 2.75%, ₹50 lakh cap, positive list and UIN process | Every eligible MSME exporter |
| DGFT Trade Notice No. 22/2025-26 | Paras 1 to 3 | 16 January 2026 | Excludes deemed exports, keeps graduating MSMEs eligible for three years, limits benefit to credit sanctioned from 2 January 2026 | Checking eligibility edge cases |
| RBI circular RBI/2025-26/195 | Paras 1 to 3 | 19 January 2026 | Tells banks to extend the subvention strictly as per the DGFT scheme | Discussing the scheme with a bank |
| DGFT Trade Notice No. 33/2025-26 | Draft HBP X.1, X.4; Appendix-A | 20 March 2026 | UIN rules, no portability, NPA cut-off, old IES UINs not valid | Exporters using more than one bank |
| DGFT Trade Notice No. 01/2026-27 | Annexure-II A | 20 April 2026 | Adds 167 Chapter 72 tariff lines for micro and small exporters | Small iron and steel exporters |
| DGFT Trade Notice No. 03/2026-27 | Para 3 | 13 May 2026 | Late-UIN relaxation for FY 2025-26 and 15-day UIN window from FY 2026-27 | Exporters who missed the UIN step |
| DGFT Trade Notice No. 13/2026-27 | Para 3 table | 14 July 2026 | Separate UINs per facility, year-specific UINs, additional claims before 31 July 2026 | Loans spanning two financial years |
| DGFT Trade Notice No. 17/2026-27 | Paras 2 to 4 | 7 August 2026 | EXIM Bank replaces RBI as implementing agency from 1 April 2026 | Banks and exporters following up claims |
| DGFT Trade Notice No. 29/2026-27 | Para 2 | 1 October 2026 | Revised Sub-Committee on Trade Finance for all Niryat Protsahan trade finance interventions | Tracking scheme governance |
What mistakes do exporters make with the Interest Equalisation Scheme and EPM interest subvention?
- Old UIN: Using a UIN from the erstwhile IES. It is not valid for EPM subvention (TN 33/2025-26).
- Late UIN: Drawing credit and generating the UIN weeks later. From FY 2026-27 the UIN must come within 15 days of disbursal (TN 03/2026-27).
- One UIN: Using one UIN for both packing credit and post-shipment credit. Each facility needs its own UIN (TN 13/2026-27).
- Year change: Assuming a FY 2025-26 UIN covers interest charged after 31 March. A fresh UIN is needed for the new year (TN 13/2026-27).
- Product check: Assuming every export product qualifies. Only tariff lines on the positive list are covered (TN 20/2025-26, Annexure-II).
- Multiple banks: Letting each bank track the ₹50 lakh cap separately. The aggregate limit is your responsibility (TN 33/2025-26).
How did we verify this?
Every rule, deadline and form on this page is linked to its official source, checked on the dates below.
- RBI: Interest Subvention for Pre- and Post-Shipment Export Credit under Export Promotion Mission (EPM), Niryat Prothsahan, RBI/2025-26/195, DOR.STR.REC.393/04.02.001/2025-26, 19 January 2026, Paras 1 to 3 (checked 8 Oct 2026)
- DGFT Trade Notice No. 20/2025-26, Launch of Interest Subvention for Pre- and Post-Shipment Export Credit under EPM Niryat Prothsahan, 2 January 2026, Paras 2 to 4; Annexure-I draft HBP X.1 to X.4; Appendix-A paras 2 to 4; Annexure-II; Annexure-III (checked 8 Oct 2026)
- DGFT Trade Notice No. 22/2025-26, Amendments to Guidelines for Interest Subvention Support, 16 January 2026, Para 1 table (X.1(b), X.3(e) to (h), X.4(e), Appendix-A 2(f), 3(a), 3(b)); paras 2 and 3 (checked 8 Oct 2026)
- DGFT Trade Notice No. 33/2025-26, Amendments to Guidelines for Interest Subvention Support, 20 March 2026, Draft HBP X.1(b), X.1(f), X.4(d) to (f); Appendix-A 3(f), 4(d), 5 (checked 8 Oct 2026)
- DGFT Trade Notice No. 01/2026-27, Inclusion of Chapter 72 tariff lines for Micro and Small Enterprises under Interest Subvention Support, 20 April 2026, Annexure-II A (167 tariff lines) (checked 8 Oct 2026)
- DGFT Trade Notice No. 03/2026-27, Clarifications on Interest Subvention Support, 13 May 2026, Paras 2 and 3 (a) to (d) (checked 8 Oct 2026)
- DGFT Trade Notice No. 13/2026-27, Clarifications on Interest Subvention Support, 14 July 2026, Para 3, clarifications 1 to 7 (checked 8 Oct 2026)
- DGFT Trade Notice No. 17/2026-27, Transition of Implementing Agency from RBI to EXIM Bank, 7 August 2026, Paras 2 to 4 (checked 8 Oct 2026)
- DGFT Trade Notice No. 29/2026-27, Revised composition of the Sub-Committee on Trade Finance under Niryat Protsahan, 1 October 2026, Paras 1 and 2 (checked 8 Oct 2026)
- DGFT Trade Notice No. 40/2023-24, Amendments under Interest Equalization Scheme, 20 March 2024, Paras 1 and 2 (checked 8 Oct 2026)
- DGFT Trade Notice No. 07/2024-25, Extension of IES beyond 30 June 2024, 28 June 2024, Paras 1 to 3 (checked 8 Oct 2026)
- DGFT Trade Notice No. 17/2024-25, Amendments under Interest Equalisation Scheme, 17 September 2024, Para 2 (checked 8 Oct 2026)
- DGFT Trade Notice No. 18/2024-25, Extension of IES beyond 30 September 2024, 30 September 2024, Paras 1 to 3 (checked 8 Oct 2026)
- DGFT trade notices list, Trade notices 2023-24 to 2026-27 on IES and EPM interest subvention (checked 8 Oct 2026)
Frequently asked questions
Was the Interest Equalisation Scheme (IES) extended beyond 31 December 2024?
No further IES extension appears in DGFT's trade notices after the one that ran up to 31 December 2024 (Trade Notice No. 18/2024-25). DGFT's 2026 notices refer to the 'erstwhile' IES, and new export credit is now covered by EPM interest subvention, which started on 2 January 2026 for MSME exporters.
Is the 2.75% EPM interest subvention rate available to large, non-MSME exporters?
No. The 2.75% EPM interest subvention is limited to micro, small and medium enterprises, both manufacturer and merchant exporters (Trade Notice No. 20/2025-26). An exporter that grows out of the MSME category keeps eligibility for three years from re-classification, subject to the other conditions (Trade Notice No. 22/2025-26).
Can a freelancer or software exporter use EPM interest subvention on export credit?
EPM interest subvention is tied to goods. Eligibility depends on a positive list of six-digit HS tariff lines, and the DGFT intent form asks for an ITC (HS) code (Trade Notice No. 20/2025-26). A pure services exporter should check with its bank before assuming any benefit. See do freelancers need an IEC code.
Does EPM interest subvention apply to packing credit in foreign currency (PCFC)?
The scheme covers pre-shipment and post-shipment rupee export credit (Trade Notice No. 20/2025-26, para 2(i)). The trade notices do not extend the 2.75% subvention to foreign currency credit, so ask your bank before choosing between rupee credit and PCFC packing credit on cost grounds.
How is the UIN format for EPM interest subvention written, and is the UDIN the same number?
DGFT gives a sample UIN format that begins with the letters EPMIES. It also says the UIN and the UDIN shown in documents generated on the DGFT portal refer to the same unique identification number for the subvention benefit (Trade Notice No. 33/2025-26, draft para X.4(f)). Give this number to your lending bank.
Can an exporter get EPM interest subvention on export credit sanctioned before 2 January 2026?
No. DGFT said interest subvention is admissible only for eligible export credit sanctioned on or after 2 January 2026, the date of Trade Notice No. 20/2025-26, and credit sanctioned earlier is not eligible (Trade Notice No. 22/2025-26, para 3). Older loans fall outside the EPM interest subvention.
Is the EPM interest subvention linked to export performance or export targets?
No. The draft FTP provisions say the support is limited to the cost of credit and is not linked to export performance, pricing, quantities exported or export-contingent conditions (Trade Notice No. 20/2025-26, Annexure-I para X.1(b)). The positive list is reviewed on parameters such as MSME concentration and labour intensity.