Minister concern on decline in export credit

Commerce and Industry Minister Piyush Goyal has asked RBI to extend US$25 billion line of credit to exporters, ensuring funds with interest rates not 2% above LIBOR.

Speaking to banks, RBI and EXIM Bank as well as exporters on 7 June 2019, has also called for the use of subvention scheme for credit guarantee and increasing the coverage of Export Credit Guarantee Corporation for export lending purposes.

Goyal stressed the importance of having low interest rate credit to boost exports to US$1 trillion each in goods and services over the next five years.

He has also been asked the Federation of Indian Export Organiations (FIEO) to submit a report within 30 days on shifting from subsidy to cheaper availability of loan in foreign currency to exporters.

The Minister has expressed concern over decline in export credit, particularly to MSME players.

“Timely and efficient availability of export credit is critical for any trade activity and is one of the key drivers that boosts growth of export,” he said.

In the last few years the share of export credit has come down and this is a “cause of concern”, especially for the MSME sector that suffers due to demand of collateral from lending institutions, he noted.

“Today’s meeting with stake holders has been called to address this significant challenge and to redress the situation based on the inputs given by participating organisations and institutions,” he added.

Goyal said the time has come to move away from subsidies and provide easy availability of cheaper credit to exporters.

The Minister wants to ease the burden on exporters and to make exports competitive and at par with global best practices.

There is a need to first develop a framework with a stable policy that is an internationally acceptable, consistent and robust and then look for solutions within that framework.

“Greater transparency has to be brought into the work being done by government organisations, export promotion councils and financial institutions,” the minister emphasized.

He said transparency will ensure that the genuine competitive advantages of exports are harnessed.

Goyal is hoping to triple export credit in the next five years and put India on par with the rest of the world where credit is cheaper and interest rates are lower.

Exporters have time and again raised issues related to credit as it impacts outbound shipments.

The meeting was attended by representatives of Ministry of Finance, RBI, State Bank of India, Canara Bank, Punjab National Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, Barclays Bank, Citi India, Bank of America, EXIM Bank, ECGC, and Indian Banks’ Association.

Exporters, export promotion councils and industry chambers including FICCI also participated in the meeting. fiinews.com