Sitharaman for priority status to export credit

Commerce Minister Nirmala Sitharaman on Wednesday said her ministry would recommend to the finance ministry according priority status to export credit, improving special economic zones and focussing on small and medium enterprises to stem the slide in exports.

Exports have fallen for 15 months in a row, mainly due to contraction in shipments of petroleum and engineering goods. Cumulative exports declined by 16.73 per cent to $238.41 billion in April-February 2015-16 from $286.3 billion in the same period of 2014-15.

The commerce ministry has sought removal of the minimum alternate tax and dividend distribution tax in SEZs to boost exports. This comes a month after Finance Minister Arun Jaitley shot down the proposal in the Budget.

The decisions emerged from the first meeting of the Board of Trade, an advisory body headed by Sitharaman and made up of officials and industry representatives.

Sitharaman said the issue of according priority status to export credit would be taken up with the finance ministry soon. She also called for an interest subsidy on pre-shipment credit.

On SEZs, Sitharaman said the ministry would work on improving their export potential. "MAT and DDT being where they are, I would want to work on SEZs so that these are better utilised," she said.

"Banks need to finance SMEs uniquely, rather than within the larger structure of corporate financing," the minister said.

Earlier, an official pointed out branch managers took up to nine months to process applications of small enterprises.

Sitharaman said her ministry would discuss with the Reserve Bank of India and the finance ministry amending the regulatory structure of EXIM Bank and the Export Credit Guarantee Corporation to allow them more flexibility.

She also touched upon the issue of bulk drug manufacturers facing difficulty in exporting to the US, which has been restricting the import of drugs with active pharmaceutical ingredients not manufactured in the country.

Sitharaman said India was dependent on China for APIs and the government had mooted plans for three pharmaceuticals manufacturing zones.