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FIEO demands export credit

May 27, 2011 | COMMENTS ( 0 )

FIEO demands export credit

A report in today's issue of The Hindu Business Line said that the Government is considering a proposal to bring back the 2 percent interest subvention scheme soon and possibly with retrospective effect from April 1. The Finance Minister and the Commerce and Industry Minister are scheduled to meet on May 30 in this regard, sources told the newspaper

Exporters are complaining that the withdrawal of the interest subsidy from April 1 has resulted in the rate of pre and post-shipment export finance increasing by over 50 percent.

According to the Federation of Indian Export Organisations (FIEO), the net interest rate on pre and post-shipment rupee credit to exporters has gone up from 7 percent (with the 2 percent interest subsidy) on April 1, 2010 to 10.75-11.25 per cent on May 12 (after the interest subsidy was withdrawn on April 1)

Meanwhile the FIEO is demanding export credit at 7 percent for small and labour-intensive sectors and 9 percent for other exporters. Export credit as a percentage of net banking credit has fallen from 9.8 percent on March 24, 2000, to 4.1 percent on December 31, 2010, it said.

Mr Ramu S. Deora, President, FIEO, said he has written to the Prime Minister, the Finance Minister and the Cabinet Secretary on the issue. He said it will be tough to achieve the Government's ambitious target of doubling exports to $500 billion by 2013-14 if exporters are burdened with high interest rates.

The popular Duty Entitlement Pass Book (DEPB) scheme is due to end on June 30 and the Finance Ministry is against giving it any extension.

The government is considering a hike in all-India drawback rates. Exporters also pitched for continuation of the DEPB scheme till the introduction of the Goods and Services Tax, the sources told the newspaper.

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