Govt in talks with RBI to reinstate US$ credit facility
The commerce ministry is in talks with the Reserve Bank of India (RBI) to facilitate the availability of dollar denominated credit to exporters, facing challenges of a slowing down world economy and high cost of credit.
“The issue is availability of dollar credit on the good old terms. In 2009... a mechanism was put in place. We had inter ministerial committee of secretaries to oversee disbursement of dollar credit... I hope on dollar credit, we will be able to make some progress in the disbursement,” commerce and industry minister Anand Sharma said at the board of trade meeting today adding that the efforts are towards keeping the confidence of exporters and industry intact.
Exporters have been demanding the availability of dollar credit as it will reduce their cost of credit substantially.
Currently, the small and medium enterprises (SMEs) exporters avail of rupee credit at around 11 per cent interest and after factoring in the 2 per cent interest subvention provided by the government, the cost of credit comes to around 9 per cent. However, dollar credit is available at around 4 per cent, Ajay Sahai, director general, Federation of Indian Export Organisation (Fieo), said, adding that allowing dollar credit would thus bring down the cost substantially for the exporters. It will also help the government reduce the subsidy burden it bears for providing the 2 per cent interest subvention, Sahai said.
The BoT meeting was held today as a prelude to the annual supplement to the foreign trade policy (FTP) 2009-14
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