DRAWING attention to the concerns over constant increase in export credit rate over the last one year, Mr Ramu S. Deora, President, Federation of Indian Export Organisations (Fieo), pointed out recently that exporters were competing with countries having credit rates below 5 per cent.
Speaking at an Interactive Session in Chennai recently, Mr Deora said that the base rate of Indian banks had moved up between 2-2.50 per cent in the last 7 to 8 months, pushing up export credit, but on the contrary, interest subvention for exports had been withdrawn from April 1, 2011.
According to the Fieo Chief, export finance cost, which was 7 per cent in July 2010, had now moved up to somewhere between 11-11.5 per cent, which is a whopping increase of about 57-64 per cent. Hence, Mr Deora urged the Commerce and Industry Minister, Mr Anand Sharma to prevail upon the government to draw the line between exports and domestic finance and make available export credit to the MSME sector at 7 per cent, and to others at 9 per cent in order to maintain export momentum.
On the DEPB scheme, Mr Deora acknowledged that it had been a time-proven instrument, helping Indian exports grow to the present level. "DEPB is well suited to the needs of small exporters, since it is not feasible for them to effect imports on their own account as economic volumes are not generated," Mr Deora said.
The Fieo chief observed that the uncertainty over continuation of the DEPB Scheme after June 30, 2011 had been a cause of concern to exporters, which could taper down growth. Hence, he urged Mr Sharma to extend the DEPB scheme till GST becomes operational or at least till the fiscal-end.
While suggesting a host of measures to cut transaction cost of exports, ranging between 7- 10 per cent of exports value, Mr Deora also alluded to the occurrences of long delay while ratifying the Norms for Advance Authorisation, issued under Paragraph 4.7 on self-declaration basis where SION does not exist.
Raising concern on the delays and paperwork involved in closure of advance authorisation at DGFT, the Fieo president contends that the same procedure should be put in force at the Customs also.
Mr Deora also asked the government to implement full EDI connectivity amongst the agencies involved in import/exports for seamless movement of cargo, which could go a long way in reducing transaction time and cost to a large extent.
Meanwhile, on the issue of DEPB extension and re-introduction of interest subvention, the Commerce Minister, Mr Sharma has made it clear that both issues have been taken up with the Finance Minister, who had given an assurance of adequately addressing the exporters' concerns.
Mr Sharma also announced that from now on the DGFT's zonal office would provide time-bound clearances, which would be audited every quarter. Besides, he also apprised that he was trying to make available the discharge of export obligations electronically in order to do away with the voluminous documents and delays.
The minister also assured that he would review the delays in imposition of provisional anti-dumping duty so that the same could be imposed in reasonable time, compared with the best practices. For providing commercial information to exporters, Mr Sharma agreed to strengthen commercial missions abroad and open more such missions.
With regard to the new manufacturing policy, Mr Sharma said it would be announced shortly with the aim of augmenting the share of manufacturing in GDP from 16 per cent to 25 per cent.
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