New Delhi, April 9 Stung by the successive dip in exports for the sixth month in March 2009 with overall export growth for 2008-09 at 3.6 per cent in dollar terms, the exporters have raised their pitch for quicker trade finance-related relief with the Reserve Bank of India.
At the invitation of the central bank, the Federation of Indian Export Organisation (FIEO) President, Mr A. Sakthivel, today met the RBI Governor, Dr D. Subbarao, the Deputy Governors, Dr Rakesh Mohan, Ms Shyamala Gopinath and Ms Usha Thorat in Mumbai. After the meeting, Mr Sakthivel told Business Line over telephone here that the top officials of the central bank gave a “positive response” to resolve some of the issues that impinge on exporters at this juncture of decline in overseas demand and rising transaction cost to trade.
In his presentation to the RBI top echelons in Mumbai, the FIEO chief sought a debt revamp to 1.3 lakh small and medium exporters even as a complete corporate debt restructuring worth Rs 14,000 crore till February had been cleared.
He said the two different chapters for small and medium enterprises and export should be merged to devote focused thrust on exporters-manufacturers myriad problems in the RBI credit policy.
Interest subvention
FIEO contends that with limited orders from developed countries which have become price competitive, the cost of credit at 9 per cent and above for Indian exporters remain a major stumbling block.
Hence, interest subvention might be extended to other commodity exports such as tea, intermediates and finished products such as basic chemicals, engineering goods, plastic and linoleum and merchant exporters. The existing scheme should also be extended till December 31, 2009.
It also urged to bring co-operative banks under the interest subvention scheme so that micro, small and medium enterprises (MSME) could utilise the facility optimally.
The losses suffered by MSME export sector in derivatives in the wake of rupee appreciation in 2007 amounting to Rs 2,000 crore should be ended with the RBI issuing directives to banks to settle losses on a 50:50 basis by banks and MSME sector.
As most of the derivative contracts entered into were in violation of the RBI guidelines, suitable regulatory measures to avoid recurrence of such problems must be put in place. The RBI could also issue directives for providing working capital term loans against export receivables, moratorium on term-loans, and extending period for declaring non-performing assets from 90 days to 180 days.
Other relief measures sought by FIEO include affordable service charges by banks, issue of guidelines for collaterals for exposure norms for the export sector to facilitate transparency and exemption for the MSME sector from the requirement of credit rating agencies which charge exorbitant fee.
Source : Business Line