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Export buoyant but may dip in Q3

August 02, 2011 | COMMENTS ( 0 )

Export buoyant but may dip in Q3

Export has shown a bouyant upward trend since last few months and this euphoria is supposed to last for a few more months. Having grown by 46.6 per cent and USD 29.2 billion, in June 2011, it has brought enthusiasm to all and sundry.

Ramu S. Deora, President, Federation of Indian Export Organisations (FIEO), said this is a reflection of the entrepreneurship of the exporters and the government’s supportive policies towards exports.

"Export growth is going to continue for another three months till September. The growth trend will not be as good in the third and fourth quarters and will get restricted to around 35-40 percent because of the withdrawal of DEPB from October 1, 2011," he said, adding that DEPB should not be withdrawn till the implementation of GST in the country.

Highlighting the growing non-conducive environment for exports from the country, Deora said that the recent hike in interest rates from 11 percent to 11.25 percent by SBI would make export finance costlier and Indian goods would become non-competitive in the international market.

He added that other banks would also follow suit and hike the interest rate to the level of 11.5 percent or even higher in the days to come.

In contrast, the rate was 7.1 percent for both pre and post shipment credit in October 2010. There has been an increase of interest rates by around 60 percent in the recent past, Deora added.

In line with the 2 percent interest subvention which was allowed to small and employment generating export sectors, Deora requested Finance Minister to reintroduce interest subvention of 2 percent for the entire export industry.

Giving example of China, which is offering export credit at the rate of 6.31 percent to 6.56 percent to its industry, Deora said the high disparity in interest rates amongst competing countries makes Indian exports highly uncompetitive in the global market.

He reiterated the importance and necessity of low cost competitive export credit to help continue the achieved growth momentum.

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