Commerce and industry minister Piyush Goyal on Friday expressed concerns over a persistent drop in export credit, especially for MSMEs, and impressed upon the central bank, Export Credit Guarantee Corporation and banks to work out modalities for making loans in foreign currency available to exporters at cheaper rates. The interest rate should be a maximum of 2 percentage points above Libor, he suggested.
At a meeting on export credit — chaired by Goyal and attended by senior government and RBI officials, exporters and bankers — the central bank was asked to “look into $25-billion line of credit from its foreign currency reserves for swap to well performing banks, and to also look into priority sector lending norms for export credit”, according to a commerce ministry statement.
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Various departments concerned have been asked to provide details for improving the gold card scheme for export credit to be submitted to the RBI. All these proposals will be discussed again and finalised in a meeting on June 30, to be held in Mumbai, the statement said.
Export credit plunged 24.4% year-on-year as of April 26, even on a favourable base (such credit had collapsed 56.2% a year earlier). In contrast, overall non-food credit grew 11.9% y-o-y as of April 26, against 10.7% in the previous year.
“Timely and efficient availability of export credit is critical for any trade activity and is one of the key drivers that boosts growth of export,” Goyal said at the meeting. He added that the time has come to move away from subsidies and ease the flow of credit to exporters at affordable rates.
Goyal hoped that the result of the meeting will lead to export credit tripling in the next five years and allow India to be at par with the rest of the world where credit is cheaper and interest rates are lower. Exporters have time and again raised issues related to credit as it impacts outbound shipments.
The meeting was attended by secretaries of commerce and MSME, the director general of foreign trade, and representatives of the ministry of finance, senior officials from RBI, State Bank of India, Canara Bank, Punjab National Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, Barclays Bank, Citi India, Bank of America, Exim Bank, ECGC, Indian Banks’ Association and bodies like Fieo, EEPC, GJEPC, Laghu Udyog Bharati, FICCI and CII.