Stimulus to help project exporters in capacity building: Exim Bank CEO

Bank has identified import-oriented sectors like capital goods, chemicals, and defence, says David Rasquinha.

David Rasquinha,  managing director and CEO of Exim Bank, tells Indivjal Dhasmana recovery in exports could be soon there even as the outbound shipments contracted over five per cent in October after showing a brief rise inSeptember.  He says the economic recovery may be gradual till a vaccine for Covid-19 is made available to all. Edited excerpts:

Rs 3,000 crore stimulus for Exim Bank seems a meagre amount. Don't you think so?

As India’s ECA (export credit agency), the Bank is increasingly engaging with other developing countries in Asia, Africa, LAC  (Latin American and the Caribbean) and CIS (Commonwealth of Independent Sttates) regions in capacity building, and thereby promote India’s project exports. The support of Rs 3000 crore would help Indian project exporters to undertake capacity building activities in other countries. This will also exhibit India’s goodwill in the international arena and showcase India’s development capabilities of Indian companies

Exports yet again contracted in October. With major markets of India witnessing more waves of Covid-19, how do you see the outlook for the year?

Though October 2020 too witnessed contraction in exports, there are positive signs that there could be recovery soon.  Firstly, the number of sectors with positive growth has increased with more addition of manufacturing sectors in the list (like textiles, and chemicals. In addition positive growth has been sustained by other traditional sectors like agro processing, meat and dairy processing, drugs and pharma etc). Secondly, cumulatively the non-oil, non-gems and jewellery segments, have witnessed positive growth in exports in the month of October (6.5%). Third, and most important sign is the narrowing down of decline in non-oil imports; in the month of October 2020; the non oil imports declined by just 2.24%, signifying the resumption of manufacturing activities. In my view, the recovery process may be gradual as India gets used to this new normal way of doing business, till the vaccine is made available to all.

In this concern, what are the potential items which can help India earn foreign exchange and create employment opportunities?

India Exim Bank has brought out a study titled ‘Self-Reliant India: Approach and Strategic Sectors to Focus’ which has identified import-oriented sectors, namely, capital goods, chemicals, defence, electronics, plastics, and solar cells/panels, apart from auto-components and steel as sectors of focus within the manufacturing sector. Import of these above mentioned items by India, in 2019-20, amounted to $ 186 billion, which is 39% of India’s total imports and 50% of India’s non-oil imports. The focus to become self-reliant in these sectors is extremely important to enhance the manufacturing capacities in India and eventually, increase exports and generate employment. (Building manufacturing capacities in these sectors would help conserve the foreign exchange besides creating employment opportunities in the country, and eventually through exports could contribute to generation of foreign exchange.)

You have been advising states on their exports. Has this made any change in their outlook towards exports?

(In recognition of the need for export promotion at the state level, and in accordance with its mandate of promoting India’s international trade,  Exim Bank has been engaging with the state governments to evaluate the state-level export performance and potential, and outline strategies for development of trade competitiveness.)

So far, India Exim Bank has prepared strategy papers for the states of Andhra Pradesh, Bihar, Jharkhand, Kerala, Madhya Pradesh, Punjab, Rajasthan, Sikkim and Mizoram, Uttar Pradesh, and West Bengal. I certainly believe that the outlook of states has changed in the recent years towards exports. The studies undertaken by Exim Bank has helped shape the export strategy of the state governments. For instance, Exim Bank had prepared a paper titled, “Export from West Bengal: Potential and Strategy”  in 2016. Subsequently, Exim Bank was invited by the  West Bengal government to draft the State Export Policy, which was subsequently finalised by the state government, approved by the state cabinet and launched in 2018.

IIP grew by a meagre 0.2 per cent in September after months of contraction. With non-oil non gold imports still contracting, do you see industrial demand taking time to recover?

The IIP has grown by 0.2% in September 2020, and it is the first such positive trend following a continued negative trend being witnessed since March 2020.  The decline in non-oil imports by India has been narrowing down, which is a sign of revival of manufacturing activity in the country. Given such trends, I am optimistic and feel that the industrial demand will be in good shape in the coming months and things will pick up progressively.