FinMin in talks with RBI on exports in priority sector

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SummaryGovt says will not roll back 30% export duty on iron ore.

The government on Friday said there is no case to roll back the 30 per cent duty on iron ore exports, even as it seeks to revive exports that had almost dried up following a series of court orders.

Speaking at a meeting with exporters on Friday, finance minister P Chidambaram indicated the government was planning to push the exports but added “there is no case to roll back (the duty)”. As a result of the ban the country is estimated to have lost about $10 billion in iron ore exports in 2012-13. Although the ban in Karnataka was partially lifted in April this year, it will take about a year to fully resume operations.

Chidambaram made the comments in the meeting held to figure out ways in which the government could revive exports. He said the government wants the RBI to include exports in priority sector lending as it would provide concessional funds for the exporters.

“As you know the ministry of finance supports it (priority sector lending). But there are some issues that have to resolved. The fear is that if you put export credit to the priority sector, some other elements of priority sector may get affected,” Chidambaram said, adding that the ministry is working with the RBI.

Currently, banks have to set aside 40 per cent of their net credit for lending to priority sectors, including agriculture, micro and small enterprises making the cost of funding cheaper for them.

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