A scheme to augment the availability of export credit — at affordable terms and in sufficient volume — will soon be unveiled, said Commerce and Industry Minister Piyush Goyal. This scheme will include forex credit.
The scheme, which aims to ease availability of export credit especially for small businesses, will likely lead to rates dropping to the sub-4 per cent category, said Goyal.
He also warned against getting bogged down in numbers that may demotivate exporters. He said there is needless speculation on the government’s target of growing the economy to the $5-trillion level.
“Do not get into calculations that you see on television... Oh if you are looking at the $5-trillion economy, the country will have to grow at 12 per cent. Today, it is growing at 6-7 per cent, do not get into that maths,” he said.
Goyal was speaking at the meeting of the Board of Trade, which advises the Centre on policy measures connected to the Foreign Trade Policy and finds ways to boost exports. It includes officials of various states, industry representatives, and export promotion councils. Easy accessibility of export credit for small exporters has been a key concern for small businesses. The government has, hence, zeroed in on specific measures for the same, to boost outbound trade.
Export credit disbursal by public sector banks fell 45 per cent in FY19 to Rs 156 billion, down from Rs 283 billion a year before, shows the Reserve Bank of India (RBI) data.
In June, Goyal had stated that exporters should be able to take more export credit in foreign currency. Subsequently, the ministry now aims to raise the share of foreign currency in total export credit much beyond the present level of 50 per cent, said a senior official.
Therefore, it has asked the RBI to consider whether its foreign exchange reserves could be used for providing a line of credit for swap to good banks for this purpose, he added. This will result in cheaper foreign currency loans.
The ministry has also discussed in detail the possibility of easing norms for banks, when it comes to lending export credit. The cap on export credit for banks — at 2 per cent of the total loans disbursed — may also be relaxed to boost export credit flows, the official added.
Merchandise exports recovered slightly to post growth of 2.2 per cent in July, compared to a huge contraction of 9.7 per cent in June. This was despite outbound shipment of high foreign exchange earners, such as refinery products, engineering goods, and gems and jewellery falling.
The minister called for speedy redressal of key issues related to imports. These include unfair competition through dumping and subsidies, as well as import of sub-standard products due to lack of set standards, while enabling smooth import of key inputs and raw material.
The Export Promotion Council has raised issues such as GST refunds, declining export credit, requirement of collateral, and inverted duty structure.
Further, participating states on Thursday raised the matter of special packages for automobile, textiles, diamonds, and fisheries, given that these sectors are facing problems resulting in lay-offs, the commerce department said.
Extension of the sunset clause with respect of SEZs, technology park for ancillary industries in the defence sector, and promotion of border trade from Northeastern states were also discussed.