New Delhi, Nov. 18: The cabinet today approved a scheme to offer a subsidy of 3 per cent on the interest rate paid by exporters, which will cost the government Rs 2,700 crore.

Exports have been falling for 11 years, with the figures for October showing an almost 18 per cent dip to $21 billion.

The CCEA (Cabinet Committee on Economic Affairs) has given its approval for "Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on pre- and post-shipment rupee export credit with effect from April 1, 2015 for five years", an official statement said.

The rate of interest equalisation will be 3 per cent, it said, adding that it would be evaluated after three years.

Financial implication of the proposed scheme is estimated to be in the range of Rs 2,500 crore to Rs 2,700 crore per year, it said.

It said the actual implication would depend on the level of exports and the claims filed by exporters with the banks.

Funds worth Rs 1,625 crore in the non-plan head of account are available under Demand of Grants for 2015-16 and would be made available to the Reserve Bank, it said.

The scheme would be available to all exports of micro, small and medium enterprises (MSME) and 416 tariff lines. But it would not be available to merchant exporters.

"We believe that this will give a big boost to exports, particularly for the MSME sector, handicraft, agri-products and food processing," power minister Piyush Goyal said after the cabinet meeting.