'Credit flow should continue'

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New Delhi, Nov 16: With the exports getting affected as a result of the current liquidity crunch, Federation of Indian Chambers of Commerce and Industry (Ficci) has suggested a slew measures for dealing with the problem.

Ficci secretary general Amit Mitra told FE, “Initially the exports were growing by 28-29%, and then it fell to 12-14% in September. In October, it has become negative (-15%)”. Mitra said in case of gems and jewellery sector, the situation is more serious since the sector is import intensive and the riding dollar is inflating import bill. Nearly $5 billion out of the total $19.7 billion (over a quarter) of India’s gems and jewellery exports typically go to the US. Another sector which has been hit is engineering goods.

As per Ficci, some of the measures required to boost exports are that credit flow should continue with least disturbance. Of late, the industry sources are facing some change in attitude of banks in disbursing credit to the corporates. The banks should be advised not to adopt any ‘unduly overcautious approach’ so that there is no practical difficulty for firms.

There should be a restoring of ‘duty drawback rates’ for employment intensive sectors such as textiles/garments, leather and footwear, handicrafts, carpets to the level existing before September 1. The refunds from the excise department should be made in seven days instead of current 90 days. Apart for this, the credit lines for the good credit worthy companies should be made available. There should be mechanism that should be evolved for refunding state/local levies and duties.

In view of the prevailing ‘sense of fear and apprehension’ among exporters on possible default by US/European buyers, Export Credit Guarantee Corporation (ECGC) needs to retain and expand its exposure to importers of these countries.