India Development News & Foreign Investment Opportunities

MSMEs face credit crunch

Petroleum sector provides cushioning


Petroleum sector provides cushioning



Labour-intensive Micro Small and Medium Enterprises (MSMEs) are either showing very modest growth or are into negative territory in their exports due to liquidity crunch, according to a senior industry official.

These sectors are still facing the liquidity crunch as banks and lending agencies have continuously been tightening their lending norms, as reflected in sharp reduction in exports credit, which does not augur well for their exports, said Ganesh Kumar Gupta, President, Federation of Indian Export Organizations (FIEO).

However, a lot of cushioning this time around has been provided by the petroleum sector to exports, as it not only outperformed but had an over impressive growth of about 105%, he said.

But Gupta expressed his concern on the rising trade deficit, primarily because of swelling of crude imports bill due to rising global oil prices, which would further add to inflationary conditions and on the current account deficit front.

Twenty-three out of 30 major product groups were in positive territory during May 2018 which recorded robust export figures.

Besides petroleum, engineering, organic & inorganic chemicals, drugs & pharmaceuticals, cotton yarn/fabs/made-ups, electronic goods and plastic & linoleum etc. have also shown positive exports growth during the month.

Gupta said domestic issues including access to credit, cost of credit especially for MSMEs should be seriously looked into as global challenges and increasing protectionism, has also added to the woes of the exporters.

FIEO President also said that “uncertainties in exports due to increasing protectionism and sanctions on Iran and Russia is adding to our woes”.

He requested the government to explore the possibility of trade in Indian rupees with the two countries.

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