Goyal calls for big push to boost exports

Minister of Commerce and Industry Piyush Goyal on Friday called for easy availability of credit at a low interest rate to boost exports of goods and services to two trillion US dollars in the next five years.

It is the joint responsibility of banks and government to ensure that export credit at competitive rates is available to businesses, said Goyal while addressing a meeting in the national capital.

In 2018-19, the overall exports (merchandise and services) reached a new peak of 535.4 billion dollars, attaining a growth of 7.97 per cent.

"We have to develop a framework with a stable policy that is internationally acceptable, consistent and robust. And then look for solutions within that framework based on trust, integrity and due diligence," he said.

"Greater transparency has to be brought into the work being done by government organisations, export promotion councils, and financial institutions," said Goyal.

He said that timely and efficient availability of export credit is critical for any trade activity and is one of the key drivers to boost the growth of export.

"The time has come when we should move away from subsidies to the easy availability of cheaper credit to exporters," he said. The minister said export credit should triple in the next five years and allow India to be at par with other countries where interest rates are lower.

Shrinking share of export credit is a cause of concern for micro, small and medium enterprises, which suffer badly when lending institutions demand collaterals while extending credit, said Goyal.

He put forth a proposal to make credit in the foreign currency available to exporters at London Interbank Offered Rate (LIBOR) plus maximum 200 basis points.

He asked the Reserve Bank of India (RBI), the Export Credit Guarantee Corporation (ECGC) and banks to work out modalities to make it possible. Goyal suggested that the subvention scheme may be used better as backstop guarantee for credit, thus increasing the coverage of ECGC for export lending purposes.

The minister asked the RBI, the EXIM Bank and State Bank of India to study the matter in detail and present it in the follow-up meeting to be held on June 30 in Mumbai.

Various other issues were deliberated in the day-long meeting, including bank coverage charges, exports to Iran, processing fee, collateral requirements, and loan disbursals. Goyal directed the concerned departments and participants to take note and come up with solutions in a time-bound manner.

The Federation of Indian Export Organisations (FIEO) has been asked to submit a report within a month on a shift from subsidy to cheaper availability of loan in foreign currency to exporters. It will also suggest how to simplify banking procedures for exports.

The ECGC was asked to prepare a report on enabling a credit guarantee to cover foreign currency lending and extending export factoring to micro, small and medium enterprises (MSMEs). The EXIM bank will submit a report on providing refinance in foreign currency to commercial banks to support export credit, particularly to MSMEs.

The RBI has been asked to look into 25 billion dollar line of credit from its foreign currency reserves for swap to well-performing banks and prior sector lending norms for export credit. Concerned departments were asked to provide details for improving gold card scheme for export credit to be submitted to RBI.

The meeting was attended by Ministers for State for Commerce and Industry Hardeep Puri and Som Parkash, Commerce Secretary Anup Wadhawan, Director General of Foreign Trade Arun Kumar Panda, representatives of various ministries, export organisations, industry bodies, banks and other stakeholders, according to a statement.