Skip to main content

Cheap Credit Other Sops for Even Large Exporters Likely

Union cabinet is likely to consider this week an interest subvention scheme to provide cheaper credit to exporters & expansion of the Merchandise Exports from India Scheme
The government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics, in a desperate bid to revive the sector after nine straight months of exports fall due to weak global demand and overvalued rupee.
The Union cabinet is likely to consider this week an interest subvention scheme to provide cheaper credit to exporters and expansion of the Merchandise Exports from India Scheme (MEIS), an official privy to developments told ET.
In the first five months of the current fiscal, exports fell 16.17% year on year, impacting the country's industrial growth as well as employment in a number of sectors, setting alarm bells ringing in the commerce ministry . While the ministry had moved a cabinet note on this last month, the Cabinet could not take it up due to Prime Minister Narendra Modi's US visit.Now that Modi is back in town, the proposal is expected to get Cabinet nod in its first meeting, said the official who requested not to be named.
Commerce minister Nirmala Sitharaman and commerce secretary Rita Teaotia met finance ministry officials recently to seek fast-tracking of the interest subvention scheme--whereby banks provide credit to exporters at subsidised rates for which they are later compensated by the government--and expansion of benefits under MEIS. The ministry has proposed interest subvention for a period of three years for both the existing sectors and, for the first time, new ones such as pharmaceuticals, chemicals and electronics, which are dominated by big companies.
“Till now, medium and small enterprises were eligible for interest subvention but now, the proposal talks of large manufactures in the chemical and pharmaceutical industries,“ the official said. In the 2015-16 Budget, finance ministry had allocated Rs.1,650 crore for the interest subvention scheme for exporters for the year.
The previous 3% interest subvention scheme was available up to March 31, 2015 for sectors including apparel, carpets, handlooms, sports goods, handicrafts, toys, and some engineering products.
The rate offered under the scheme in 2013-14 was 2%.
Experts said if approved, the scheme would give a muchneeded fillip to exporters as the country's exports have declined for nine straight months and more than half the exporting sectors are reeling under pressure from slowing global demand and declining prices.
“The export situation is pretty bad and the government will have to provide some support because both value and quantity of exports have declined,“ said D K Joshi, chief economist at rating agency Crisil. “Real exports are down 6.5% in the first quarter and things might be worse in the second quarter. Labour-intensive sectors like textiles and gems and jewellery and knowledge driven sectors like pharma will need more focus,“ Joshi said.
Also, estimates suggest that exports in 2015-16 might be lower than shipments worth $310 billion, or about Rs.20 lakh crore, achieved in the previous fiscal.According to the government officials quoted earlier in their meeting with finance ministry officials the commerce department had “also asked for reduction in transaction costs and increase in duty drawbacks for steel sector which has seen two duty hikes this year“.
Commerce secretary Teaotia has also called a meeting of all export promotion councils on October 7 to discuss issues related to decline in exports of various commodities from India, the official said.
The slowdown in China has impacted global trade, but India seems to have been hit harder because of a stronger currency relative to its competitors.
The Economic Times, New Delhi, 5th Oct. 2015

Comments

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...

Govt invites applications for RBI deputy governor's post, last date Nov 30

  The government has invited applications for the post of deputy governor of Reserve Bank of India from interested candidates with at least 25 years of experience and below 60 years of age as on January 15, 2025.One of the deputy governors, Michael Patra’s current term will end on January 15.According to an advertisement, candidates should have at least 25 years of work experience in Public Administration, including experience at the level of secretary or equivalent in the Government of India, or persons who have at least 25 years of work experience in an Indian or International Public Financial Institutions; or persons of exceptional merit and track record at the national or international level in the relevant field.The last date of submission of the application is November 30, 2024.   It has been clarified that the Financial Sector Regulatory Appointments Search Committee (FSRASC) – a body which will select the candidates- is free to identify and recommend any other person a...