RBI Issues New Guidelines on Interest Subvention for Export Credit under Niryat Protsahan

The Reserve Bank of India (RBI) has recently issued operational guidelines to implement the interest subvention component of the export credit support scheme under the Export Promotion Mission — known as Niryat Protsahan. This comes against the backdrop of efforts to strengthen India’s export competitiveness, especially for Micro, Small and Medium Enterprises (MSMEs), by reducing the cost of credit and easing liquidity pressures. The operational instructions were notified by the Directorate General of Foreign Trade (DGFT), marking a key step in rolling out this scheme on a pilot basis through the banking system.  

What Is the Niryat Protsahan Interest Subvention Scheme?

The interest subvention scheme under Niryat Protsahan aims to lower the finance cost for exporters by subsidising part of the interest charged on both pre-shipment and post-shipment rupee export credit. Pre-shipment credit refers to working capital that exporters use before goods are shipped, while post-shipment credit helps bridge the gap between dispatch and realisation of export proceeds. Research shows that high borrowing costs and tight liquidity have been persistent constraints for MSME exporters, particularly in labour-intensive and value-added sectors.  

Under the RBI’s operational guidelines, eligible exporters can receive an interest subvention of 2.75% per annum on eligible export credit. The benefit is capped at a maximum of ₹50 lakh per exporter per financial year (FY26). The scheme targets MSME manufacturers and merchant exporters holding a valid Importer-Exporter Code (IEC) and Udyam registration. The support is currently being piloted for FY 2025-26 and will be reviewed periodically to refine its application and impact. 

This support is expected to directly reduce the effective interest rate exporters pay on working capital loans, providing some relief from higher credit costs in a challenging global trade environment.  

Why RBI’s Guidelines Matter?

The RBI’s role is to ensure the interest subvention benefit flows through the banking system properly. In its circular, the central bank has directed scheduled commercial banks (excluding regional rural banks), primary urban co-operative banks, state co-operative banks, and All-India Financial Institutions to extend the benefit only to eligible credit facilities as per regulatory norms. Lenders must ensure compliance with the RBI’s Master Directions on Pre- and Post-Shipment Export Credit and follow prescribed claim procedures for reimbursement. (TaxGuru)

Operational guidelines also promote transparency and uniformity in implementation, reducing ambiguity for lenders and exporters alike. The RBI’s involvement ensures that the scheme aligns with macroprudential norms and that credit flows remain robust even as subsidies are passed on. (TaxGuru)

Who Benefits and How

The primary beneficiaries are MSME exporters, who often find it harder to access affordable credit due to stricter collateral and documentation norms. By subsidising part of the interest cost, the scheme seeks to make export financing more competitive and predictable. Exporters from sectors included in the programme’s positive list of tariff lines — which covers roughly 75% of India’s export categories — stand to gain the most.  

The subvention reduces the burden of pre- and post-shipment financing costs, enabling exporters to better manage working capital and remain competitive in global markets that are facing soft demand and rising costs. This is especially relevant given trade headwinds that many Indian exporters have faced of late. 

Operational Issues and Next Steps

As this is a pilot rollout, banks and financial institutions must establish robust mechanisms to ensure that the subsidy is credited upfront on eligible credit and that claims with the RBI or designated nodal agencies are processed without delay. The DGFT has invited feedback from stakeholders as part of the implementation process, indicating that refinements to eligibility conditions and processes may follow based on early experience.  

Interest subvention rates are also set to be reviewed twice yearly — typically in March and September — based on domestic and international benchmarks, ensuring relevance in changing market conditions.  

Conclusion

The RBI’s recent guidelines for interest subvention under Niryat Protsahan are an important step toward reducing export credit costs for Indian MSMEs. By working with banks and the DGFT, the central bank is helping ensure smoother implementation of this component of the Export Promotion Mission. While it is just one part of a broader package of export support measures, the focus on credit affordability and operational clarity may ease liquidity constraints for exporters and strengthen India’s export ecosystem in an increasingly competitive global market.