The Indian government recently reported that approximately 11,000 exporters are benefiting from the interest equalisation scheme, which helps reduce the cost of credit for Indian exporters, especially among small and medium enterprises (SMEs).
In a written response to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada emphasized the importance of this policy instrument in providing competitive advantage to MSMEs. He noted that due to high domestic interest rates, exporters face significant disadvantages when competing on the global stage.
Currently, India's repo rate stands at about 6.25%. In comparison, exporters endure interest rates that can range from 8% to over 12%, depending on various factors such as risk and assessment by banks. This stands in stark contrast to competitor countries, where interest rates are considerably lower. For instance, the central bank rate in 2025 shows 3.1% for China, 3% for Malaysia, 2% for Thailand, and 4.5% for Vietnam.
Prasada highlighted that the interest equalisation scheme offers support at rates of 3% for exports made by MSMEs and 2% for 410 identified product categories. This scheme is partially extended until December 31, 2024, particularly benefiting MSME manufacturer exporters with a cap of Rs 50 lakhs per exporter.
In further developments, the interest equalisation scheme has been integrated into the broader Export Promotion Mission, which has a budgetary allocation of Rs 2,250 crore. Through this mission, the government is committed to facilitating access to export credit, providing cross-border factoring support, and assisting MSMEs to navigate non-tariff measures in international markets.
Additionally, Prasada informed that a cumulative incentive of Rs 13,029 crore has been disbursed under the Production Linked Incentive (PLI) scheme, covering nine sectors such as large-scale electronics manufacturing, IT hardware, pharmaceuticals, drones, and more.
On a different continent, challenges related to the sheepmeat exports to India came under scrutiny as Australian farmers sought to understand the effects of a free trade agreement that came into effect two years ago. Australian Trade Minister Todd McClay reported that although lamb exports to India have grown significantly since the start of the agreement, actual export figures remain modest.
This month, during a visit to Delhi, Prime Minister Christopher Luxon received the green light to resume negotiations for a trade deal with India after a decade-long hiatus. He expressed confidence in finalizing a deal prior to the next year’s elections.
McClay informed reporters that negotiations for dairy market access might be difficult, but there is optimism surrounding sheepmeat exports. However, statistics from Australia’s Department of Agriculture, Fisheries and Forestry reveal that sheepmeat exports to India were merely 250 tonnes last year, and lamb exports were less than 50 tonnes—barely a blip compared to Australia’s total sheepmeat exports of 614,396 tonnes.
Moreover, an executive from a major New Zealand meat exporter expressed skepticism regarding the Indian market’s potential, even if tariffs for New Zealand sheepmeat were eliminated. According to this exporter, India is currently an extremely price-sensitive market that offers little incentive compared to more lucrative international markets.
Despite the FTA with India, Australian exports have faced major obstacles that include delays in export plant licenses. A director of a major meat exporter based in Delhi pointed out that the challenges remain rooted in logistics and establishing scale in the Indian market.
Efforts from the New Zealand meat industry, spearheaded by companies like Alliance Group and its partner Quality NZ, have tried to penetrate the Indian market for years. Utilizing the fame of former cricket stars such as Stephen Fleming and Brendon McCullum, they aimed to tap into the cricket-loving culture of India. Yet, official data indicates that these companies have managed to sell only $2-3 million worth of sheepmeat annually during this period.
A former board member from Alliance remarked on the restrictive nature of tariffs, which has limited market penetration mostly to premium hotel markets and some airline kitchens. According to McWilliam, Alliance’s global head of sales, the advantages that Quality NZ has in this emerging market may soon be realized, particularly if tariffs are successfully removed.
In summary, both Indian exporters and Australian sheepmeat exporters are navigating a complex set of challenges, from high interest rates to market penetration issues. The Indian government is actively trying to support its exporters through various incentives, while Australian exporters are cautiously optimistic about future agreements with India amidst ongoing challenges.
