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DGFT amends guidelines for interest subvention support under EPM to boost pharma exports
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Shardul Nautiyal, Mumbai
January 22 , 2026
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The Directorate General of Foreign Trade (DGFT) has amended guidelines for interest subvention support for pre-and post-shipment export credit under Export Promotion Mission (EPM) to boost pharma exports.
Interest subvention support for pre-and post-shipment export credit under EPM is a government scheme that lowers borrowing costs for micro, small, and medium enterprise (MSME) pharma exporters by directly subsidizing a portion of the interest on their rupee-denominated export loans, making credit cheaper and improving cash flow for activities like production (pre-shipment) and fulfilling orders (post-shipment). It effectively reduces the exporter's interest burden, boosting liquidity, competitiveness, and global integration.
These amendments followed by a Trade Notice dated January 02, 2026 has been issued for operational clarity and certainty.
The revised guidelines state that export credit extended by lending institutions in accordance with the Reserve Bank of India (RBI) consolidated directions on credit facilities, as amended from time to time, shall qualify for support under the scheme.
The revised guidelines also state that the support shall be available exclusively to eligible MSME exporters for financing export transactions and shall apply to the interest cost, in accordance with applicable financial and regulatory guidelines. The guidelines earlier stated that the support shall be available exclusively to eligible MSME exporters for financing export transactions and shall apply only to the credit cost element, in accordance with applicable financial and regulatory guidelines.
As per revised guidelines, revised interest subvention rates, as notified from time to time, shall be applicable only to export credit facilities sanctioned on or after the date of such notification. Existing facilities shall continue to be governed by the subvention rate applicable on the date of sanction.
The revised guidelines further state that given interest subvention shall not be admissible in respect of deemed exports, as defined under Chapter 7 of the Foreign Trade Policy (FTP) 2023. Interest subvention shall not be admissible where the export credit account turns non-performing prior to completion of the eligible export cycle, in accordance with applicable regulatory norms.
Exporters graduating out of their existing MSME category during the financial year, due to an upward change in investment or turnover, shall continue to remain eligible for interest subvention support for a period of three years from the date of such re-classification, in accordance with Ministry of MSME Notification S.O. 4926(E) dated October 18, 2022, and subject to fulfilment of all other prescribed conditions.
Where an exporter avails export credit from more than one lending institution, the responsibility to ensure that aggregate interest subvention claims remain within the prescribed annual ceiling shall rest solely with the beneficiary exporter. Any excess claim identified shall be recoverable in accordance with applicable provisions.
The revised guidelines also state that reimbursement to banks shall be made on a monthly basis, limited to the actual amount of interest subvention extended to eligible exporters, as reflected in the verified claims submitted by banks to the RBI.
The determination of interest rates on export credit shall remain at the commercial discretion of lending institutions, in compliance with applicable regulatory directions. Interest subvention shall be extended on the interest cost actually borne by the exporter, as per the notified subvention rate under this intervention.
Banks shall submit Import Export Code (IEC)-wise monthly interest subvention reimbursement claims online through the designated portal within fifteen (15) days from the end of each month. All related reports, including consolidated and bank-wise monthly statements, shall be submitted online through the portal, and no manual or offline submission of reports shall be permitted.
“For FY 2025-26, the annual ceiling on interest subvention shall apply in full and shall not be subject to pro-rata adjustment, irrespective of the date of sanction or duration of utilisation during the financial year. Interest subvention shall be admissible only in respect of eligible export credit sanctioned on or after January 02, 2026, being the date of issuance of Trade Notice No. 20/2025-26. Export Credit sanctioned prior to this date shall not be eligible,” the DGFT stated.
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