The economic slowdown has taken its toll on the export performance of Karnataka for the year 2008-09. The state’s export earnings are estimated to be lower by around 25 per cent for the year ended March 2009 compared to Rs 1,32,700 crore achieved in the previous fiscal.
For the nine month period ended December 2009, exports from the state were estimated at Rs 70,000 crore and for the full year, the initial predictions are that the state may have lost around Rs 10,000 crore export earnings, according to D Muralidhar, president, Federation of Karnataka Chambers of Commerce and Industry (FKCCI).
Speaking at a seminar on ‘New stimulus package to help SME exporters and banks’, here today, he said, “The shortfall in export earnings of the state is mainly due to the adverse market conditions prevailing following the global financial meltdown and its impact on India,” he said.
Major affected sectors in Karnataka are Information Technology, readymade garments, engineering goods among others. “The government should add to competitiveness of exports by removing cost disabilities of exports including unrebated taxes and duties, high cost of power, high inland freight, high interest rates and ground level transaction cost,” Muralidhar said.
He said the recent fiscal stimulus measures announced by the Central government and rate cuts by the Reserve Bank of India will help the exporters in reducing their transaction costs and times. The procedure like re-credit of 4 per cent SAD under different authorization and payment of duty in respect of restricted items will allow fuller utilization of credit will benefit the exporters, he said.
“The special package of Rs 325 crore will help leather and textiles sector. However, garment exports to US and Europe needs to be included in Special Focus Scheme as these markets are the worst hit and we need to continue with our presence,” he said.
Speaking on the occasion, A V Muralidharan, Chairman, Export Credit Guarantee Corporation of India Ltd (ECGC) said nearly 90 per cent of the export consignments going from India are not covered under any insurance and there is a greater need for the exporters to bring themselves under the insurance bracket to save from the losses.
Referring to the fiscal stimulus package announced by the government recently, he said a sum of Rs 350 crore has been sanctioned by the Centre out of the corpus available under National Export Insurance Account (NEIA) for the benefit of exporters and banks. This package is aimed at providing additional benefits to exporters and banks under the Credit Insurance covers issued to them by ECGC, he said.
The percentage of cover protection available to exporters availing the credit insurance covers is enhanced by 5 per cent under the Export Credit Insurance Policies issued to them and for the financing banks the protection is increased by 10 per cent under the Export Credit Insurance Covers for banks. Thus, the maximum percentage of cover for the exporters stands enhanced at 95 per cent and for the banks to 85 per cent, he added.
For the year ended March 2009, ECGC has reported a total premium income of Rs 745 crore and paid out Rs 450 crore towards the claims, he said.