Page 53 - ELT_1st June 2020_VOL 372_Part 5th

Higher export credit, more time to pay import bills
Exporters laud steps but ask for direct fiscal support
The Reserve Bank of India (RBI) on 22-5-2020 announced a series of re-
laxations for exporters and importers, including higher export credit, more time
to pay for import orders and increased flexibility in repaying loans. While ex-
porters lauded the measures as timely, the call for more government support and
especially a detailed package continues.
The rare intervention in foreign trade norms by the RBI came after it took
note of the deepening contraction in global activity and trade, agreeing that the
impact on India’s Foreign Trade is substantial. India’s exports contracted by a
record 60.28 per cent in April, the steepest fall since at least April 1, 1995.
“Exporters would need direct fiscal support to stay in business. These
measures can be in the form of waiver of electricity user charges, reduction of
levies at the ports, freight support and wage support for workers,” said Engi-
neering Export Promotion Council Chairman Ravi Sehgal.
The RBI boosted the coffers of the Export-Import Bank of India by ex-
tending a line of credit worth ` 15,000 crore for 90 days (with rollover up to one
year) to enable it to avail a US dollar swap facility. This is expected to help in
leveraging long-term finance and project exports as a “marketing tool” as buyers
would be more willing to purchase products from the seller, according to the
Federation of Indian Export Organisations (FIEO).
For exporters, the maximum permissible period of pre - and post-
shipment export credit sanctioned by banks has also been raised. As opposed to
the current 12 months, this will now be 15 months, for disbursements made up to
July 31, 2020.
While the measures would usher in an era of very competitive credit
rates to help manufacturing and the overall economy, these would also ensure
that inflation remains within the target range, said Sharad Kumar Saraf, Presi-
dent of FIEO. “We again urge the Government to immediately announce an ex-
port package covering all export sectors,” he added.
RBI Governor Shaktikanta Das also pointed out that investment demand
has stopped as imports of capital goods fell 27 per cent in March, before plung-
ing by 57.5 per cent in April. Domestic production of capital goods declined by
36 per cent in March, spiralling downwards for the 14th straight month.
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