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FIEO Comes Down Heavily on Banks, Sends SOS to Government to Set Things Right

New Delhi:

Port Wings News Network:

FIEO President, Mr Ganesh Kumar Gupta has said that the bank credit issue of exporters are yet to be resolved.

PSU Banks officials including MDs, EDs, GMs, AGMs are not accessible to exporters particularly from the MSME sector. This has tightened the hands of these exporters to take orders. As such, they are not able to discuss issues and challenges with regard to availability and cost of credit to the exports sector. Commerce Minister, Mr Suresh Prabhu, who is taking several steps to promote exports would not fructify if banks would not lend to exporters smoothly and at affordable rates.

On one hand, the government is pushing digital India initiative and paperless transactions, these banks demand bundles of documents, collateral and other papers for considering our applications for smaller limit (Rs one to five crores) of loan. It takes months and months to get these limits approved and in the mean time we loose our orders. The issue needs urgent attention of the government.

Similar is the problem with the ECGC, which is very reluctant to extend insurance cover. They reject claims on very flimsy grounds. I would urge the Commerce Minister to look at the matter on an urgent basis. If banks and ECGC continue to behave like this, we would not be able to register double digit growth rate in exports.

The matters which should be the focus of the government to push exports includes:

  1. Enhancement of Duty Drawback rates.
  2. More products like fabrics should be included under MEIS.
  3. The Interest Equalisation scheme increased from three to five per cent by the Prime Minister should be extended to merchant exporters as well, as they contribute about 35 per cent in the total exports.
  4. To promote exports of GI products, government should join hands with FIEO to set up big stores at airports also.
  5. GST refunds at airports should start immediately.

These measures would help in reaching USD 350 billion exports and recording substantial growth rates.

Besides, on India-China, the FIEO Chief is is of the view that India’s exports to China is moving positively from 2016-17 when it grew by 13% followed by 31% growth in 2017-18. India’s exports to China grew up by about 17% in the first six months of 2018-19, more or less in line with general trend in India’s exports.

However, the sharp decline in exports of copper, ores and minerals, zinc shows that India’s exports are moving towards value added exports. India’s exports of marine products grew up by over 100%, organic chemicals by 40%, plastic & plastic products by 70%, gems & jewellery by 60% and mechanical machineries and appliances by 20%.

The address of market access issues by agriculture and processed food products would help in increasing India’s exports to China. While Pharma sector has shown marginal growth, it has huge potential as cost of medicine in China is very high and Indian cancer drugs have already gained much acceptance in China.

The temporary truce between China and US is good for world economy and trade as it has reduced the uncertainties which will help in further growth of global trade. The existing tariff on a large number of products provide opportunity to other countries in their exports to US and China.

Further Mr Ganesh Kumar Gupta reiterates that India’s exports to Iran grew by about 22% in first six months of 2018-19. However, the imposition of sanction has definitely impacted India’s exports as three months window provided by the US got over in August, 2018.

In past six months, India has shown good growth in export of cereals, meat & meat products, paper & paper products, pharmaceuticals, made-ups, auto-components, electrical machinery and equipment,  glass& glassware, etc. However, exports of Iron & Steel, article of iron & steel, copper, plastic & plastic products, essential oils, inorganic chemicals, man-made staple fibre, apparels suffered during the first six months of the financial year.

We have been given to understand that UCO bank is working on necessary modalities to start the Rupee Payment. This should apply to all exports except those in OFAC list or those under sanctioned entities.

Insurance and shipping remain a challenge for exports to Iran as both European and US based insurance/shipping companies are reluctant to take such business.

Since most of the courier companies have also boycotted Iran, sending of exports documents is also a challenge particularly with the unavailability of SWIFT. India Post should look into the opportunity to fill the gap.

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