MSME Interest Subvention Scheme 2026: How to Claim the 2.75% Benefit

The MSME interest subvention scheme 2026 is intended to support eligible MSME exporters by lowering the cost of certain export credit facilities. Under the framework notified through the Export Promotion Mission – Niryat Protsahan, qualifying exporters may receive an interest subvention of 2.75% per annum on eligible pre-shipment and post-shipment rupee export credit, subject to prescribed conditions and limits.

The benefit is linked to specific eligibility requirements, including valid exporter registrations, product-category conditions, and UIN-based identification on the DGFT platform. Because the scheme operates through lending institutions, the claim process involves both exporter declarations and banking procedures.

This article explains the scope of the scheme, eligibility criteria, annual benefit limits, UIN generation requirements, claim procedures, and key considerations relevant to participating MSME exporters.

What Is the MSME Interest Subvention Scheme?

Interest subvention means the government covers a portion of the interest cost on eligible credit facilities, reducing the effective interest burden for the borrower. Under the MSME interest subvention scheme, eligible exporters receive a 2.75% per annum benefit on qualifying rupee export credit.

The scheme was introduced under the Export Promotion Mission (Niryat Protsahan) through DGFT Trade Notice No. 20/2025-26 dated 2 January 2026. It replaced the earlier Interest Equalisation Scheme, which ended in 2024.

Since the framework is being implemented on a pilot basis, operational guidelines and procedures may be updated through subsequent notifications, amendments, or clarifications issued by the relevant authorities.

The MSME interest relief scheme is designed specifically for export credit support. It does not apply to all MSME loans or general business borrowing facilities.

Key Numbers at a Glance

For example, if an eligible exporter takes export credit of INR 20 lakh for six months, the approximate benefit calculation can be:

INR 20,00,000 × 2.75% × 6/12 = INR 27,500

This illustration shows the possible interest relief based on the scheme rate. Actual benefit depends on eligible credit amount, duration, documentation, and lender processing.

Who Is Eligible? Checklist for MSME Exporters

The MSME interest subvention eligibility requirements focus on exporters meeting specific registration and credit conditions. Eligible applicants typically need to satisfy the following criteria:

1. Active Import Export Code (IEC): The exporter must have a valid IEC that is not suspended, cancelled, or listed under the Denied Entity List.
2. Valid Udyam Registration: The MSME should have an active Udyam Registration Number under the MSME udyam registration export scheme requirements.
3. Eligible export credit: The credit facility must qualify as pre-shipment or post-shipment rupee export credit under applicable central bank directions.
4. Approved product category: Exported products should fall within the notified positive list of eligible HSN six-digit tariff lines specified under the scheme guidelines and applicable amendments.

Both manufacturer exporters and merchant exporters can apply if they meet the prescribed conditions. Manufacturer exporters typically export goods produced by their own units, while merchant exporters source products from manufacturers for export. The documentation process can vary depending on the exporter category and lender requirements.

The positive list may be reviewed periodically. Eligibility is generally linked to notified product categories and registrations rather than export performance targets or minimum export turnover requirements.

How to Claim the Benefit: Step-by-Step Process

The following section outlines the operational process generally followed for how to claim MSME interest subvention under the notified framework. The claim process involves registration, declaration filing, UIN generation, and coordination with the lending bank.

Step 1: Verify eligibility

Before applying, exporters should confirm that their IEC is active, Udyam Registration details are valid, and their export product falls under the notified list.

Step 2: File intent declaration on DGFT portal

The exporter needs to log in to the DGFT portal and submit an online declaration of intent before obtaining eligible export credit.

Step 3: Complete DGFT UIN generation

After submission, a Unique Identification Number (UIN) is generated. The UIN is linked to the bank account mentioned in the IEC profile and remains valid until the end of the financial year.

Step 4: Submit UIN to the lending bank

The exporter provides the generated UIN to the bank while applying for eligible export credit.

Step 5: Benefit application through the lending bank

The lending bank applies the eligible subvention benefit upfront, reducing the effective interest payable by the exporter.

Step 6: Bank reimbursement process

The bank then follows the operational procedure to claim reimbursement from the central bank.

Each UIN is linked to one lending bank. If an exporter uses multiple banks for export credit, a separate UIN may be required for each bank. Exporters should maintain records across all facilities to ensure their combined claims remain within the INR 50 lakh annual cap.

What Happens If You Exceed the INR 50 Lakh Annual Cap?

The MSME interest subvention annual cap limits the total benefit an exporter can claim during a financial year. If claims across multiple banks exceed INR 50 lakh, the excess amount must be voluntarily surrendered before the financial year closes.

If the excess benefit is not surrendered within the required period, recovery action may apply according to the scheme process. Exporters using multiple export credit facilities should coordinate with their banks and maintain updated records of claimed amounts.

Monitoring the cumulative benefit received from all lending institutions can help exporters avoid issues related to the uin cap breach MSME scheme provisions.

Conclusion

The MSME interest subvention scheme 2026 provides a structured mechanism through which eligible MSME exporters may receive interest relief on qualifying pre-shipment and post-shipment rupee export credit, subject to applicable conditions, documentation requirements, and annual benefit limits.

As outlined in this guide, access to the benefit is linked to factors such as valid IEC and Udyam registrations, notified product categories, DGFT declaration filing, and UIN-based processing. The annual cap, lender reporting requirements, and multi-bank considerations also play an important role in determining how the scheme operates in practice.

Since the framework is being implemented on a pilot basis, exporters may wish to monitor subsequent updates, amendments, and operational clarifications issued by DGFT, RBI, or other authorised agencies. Eligibility, claim processing, and benefit availability remain subject to the applicable scheme guidelines in force at the relevant time.

Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more