The Reserve Bank of India, vide Circular RBI/2025-26/195 dated 19 January 2026, issued directions on the interest subvention scheme for pre-shipment and post-shipment export credit under the Export Promotion Mission — Niryat Prothsahan. The circular operationalises the Government of India's initiative to provide subsidised credit to exporters, with the objective of reducing the cost of export finance and enhancing the competitiveness of Indian goods and services in global markets.
Background
Indian exporters have historically faced higher borrowing costs compared to their counterparts in competing export economies, placing them at a structural disadvantage in price-sensitive international markets. Interest subvention schemes — through which the Government subsidises a portion of the interest payable on export credit — have been a longstanding policy instrument deployed to address this cost differential.
The Export Promotion Mission (EPM), branded as Niryat Prothsahan, represents the Government's current strategic framework for boosting Indian exports across sectors. The mission encompasses a range of trade facilitation measures, of which the interest subvention for export credit is a central pillar. The RBI's circular provides the operational framework through which banks are to extend the subsidised credit to eligible exporters and subsequently claim reimbursement from the Government.
The scheme covers both pre-shipment credit — financing extended to exporters for the procurement, manufacture, and processing of goods prior to export — and post-shipment credit — financing extended against export receivables after shipment has been effected. This dual coverage ensures that exporters receive cost relief across the entire trade finance cycle.
Key Provisions
The circular issued by the RBI establishes the following operational parameters for the interest subvention scheme:
Coverage of pre-shipment and post-shipment credit: The subvention applies to both categories of export credit, ensuring that exporters benefit from reduced financing costs from the stage of procurement through to the realisation of export proceeds. This comprehensive coverage addresses the full working capital cycle associated with export transactions.
Subsidised interest rates for eligible exporters: Under the scheme, eligible exporters receive export credit at interest rates reduced by the quantum of the subvention provided by the Government. The subvention is intended to bring effective borrowing costs closer to internationally competitive levels, thereby reducing the cost disadvantage faced by Indian exporters.
Bank-level implementation and reimbursement: Authorised Dealer banks and other lending institutions are required to extend the subvention benefit to eligible exporters at the point of credit disbursement. Banks subsequently claim reimbursement of the subvention amount from the Government through the mechanism prescribed by the RBI.
Alignment with the Export Promotion Mission: The scheme forms an integral component of the broader Niryat Prothsahan initiative, which seeks to achieve targeted export growth through a combination of financial incentives, trade facilitation reforms, and market access programmes.
Implications for Practitioners
The operationalisation of the interest subvention scheme under Niryat Prothsahan provides immediate and tangible financial relief to the export community. Practitioners advising export-oriented businesses should ensure that their clients are aware of eligibility criteria and documentation requirements to avail of the subsidised credit without delay. Given the scheme's coverage of both pre-shipment and post-shipment stages, exporters should evaluate their entire trade finance arrangements to maximise the benefit.
For banks and lending institutions, the circular creates a compliance and operational framework that requires internal process configuration — from borrower eligibility verification to subvention claim submission. Banks that have historically operated interest subvention programmes will need to update their systems to align with the specific parameters of the Niryat Prothsahan scheme.
Corporate treasury functions of export-focused companies should incorporate the subvention into their working capital cost modelling. The effective reduction in borrowing costs, while beneficial, should be factored into pricing strategies and cash flow projections with an awareness that such schemes are subject to periodic review and may be modified or discontinued based on fiscal and trade policy priorities.