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Editorial: Commerce and Industry Minister Gets on Work Right Away

Port Wings, 12 June 2019:

As anticipated by the export and import community who were eagerly waiting for the new government to address issues related to trade, the Commerce Minister Piyush Goyal gets onto work right away –to fix things that plague nation’s growth.

To chalk out the correct roadmap that will culminate the task, Commerce and  Industry Minister Piyush Goyal held a detailed meeting few days ago with Chairman and Managing Director SBI, MD Export Credit Guarantee Corporation, MD EXIM bank and other public sector, private and foreign banks along with FIEO and other export promotion councils and industry bodies for exploring ways and means for easier availability of credit to exporters at competitive rates. To keep the whole team informed to take decisions swiftly, ministers of State for Commerce and Industry, Hardeep Puri and SomParkash also participated in the deliberations.

During the meeting, the Minister emphasized that India needs to aspire for a export target of USD one trillion each for goods and services and for that it is the joint responsibility of government, financial institutions and industry to ensure that export credit at competitive rates is available to business.

According to Piyush Goyal, India need to achieve a much higher level of export credit from the present level of 9.5 lakh crore.

There is a need for a quantum jump to achieve our export targets, opined the Minister. In this regard, he asked RBI, ECGC, EXIM and SBI to explore regulatory reforms, innovative financial instruments and rationalizing credit disbursal procedures.

Pitching for the level playing on global stand, Commerce and Industry Minister stated that exporters should be able to take more and more export credit in foreign currency. Its share in total export credit should increase from the present level of about 50%.

RBI was also asked to explore the possibility of use of its foreign exchange reserves for providing a line of credit for swap to good banks for this purpose resulting in cheaper foreign currency loan. ECGC was asked to enable a credit guarantee cover for foreign currency lending to MSMEs. EXIM bank may provide refinance in foreign currency to the commercial banks to support exports credit particularly to MSMEs. ECGC should also extend export factoring for MSMEs.

Federation of Indian Export Organisations (FIEO) and other export promotion councils and industry bodies raised various issues including bank coverage charges, issues in exports to Iran, processing fee issues, collateral requirements and issues in loan disbursals.

At the first of series of planned meeting, many of the issues were immediately resolved with the intervention of the Commerce and Industry Minister. He requested the financial institutions and the departments concerned to take note of the remaining issues and come up with solutions in a time bound manner. FIEO was asked to submit a report on simplification of export credit procedures by 30 June, 2019.

Commerce and Industry Minister also decided to have a follow up meeting on June 30, 2019 in Mumbai to review the progress on the action items identified in the meeting.

Going by the Minister’s zeal at the meeting, this is a nice and concrete first step towards arrest the trade issues India is facing right now. Given the US government’s GSP withdrawal and stoppage of importing crude from Iran, India’s economy is bracing for a storm from unknown direction.

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