Eefc Facility Extended To Cos, Partnership Firms

Meet on exporters grievances today

The Reserve Bank of India has extended the facility of export earners foreign currency (EEFC) account under which loans are advanced to supporting manufacturers and importers to corporate houses, and proprietary and partnership firms.

Exporters had been pointing out to RBI at different fora that over 3,000 professional exporting firms accounting for about 75 per cent of the countrys total exports were proprietary and partnership firms. These firms were denied the privilege of utilising EEFC to assist importer clients and manufacturers.

Exporters also argue that they should be allowed to use EEFC account for all loans, joint venture investments and also for meeting expenses related to merchandise trade. They have also suggested that EEFC account be made fully convertible under the current account and a cheque book facility in foreign currency be made available to EEFC account holders.

 

At a recent meeting with RBI officials, exporters sought a 10 per cent devaluation of the currency and a rise in the quantum of credit extended to them to 15 per cent. It is argued that there is a case for adjusting the rupee against the dollar to the extent of 10 per cent so that the dollar rests at Rs 38-40.

Exporters pointed out that several Asian countries including Indonesia, Thailand, Malaysia, Japan and China had devalued their currencies. They pointed out the appreciation of the rupee would hurt the balance of payments situation. They urged RBI to reverse the dollar inflow through portfolio investment. Competing countries including Pakistan and Bangladesh have seen significant devaluation in the past two years with the former devaluing in double digits. Exports from India have been uncompetitive by 15 per cent solely on account of the exchange rates, says Federation of Indian Export Organisations president Ramu S Deora.

There is a meeting scheduled for today between exporters and revenue secretary N K Singh in Mumbai to solve various customs- and excise-related problems. Commerce secretary P P Prabhu, CBEC chairman R Gopalanathan, CBDT chairman Ravi Kant, member customs D S Solanki, and member drawback S P Srivastav are expected to attend the meeting.