Finance Minister underlines need for cheaper credit to boost exports.
Finance Minister Mr. P Chidambaram today said that the government is committed to giving boost to exports and is in talks with the Reserve Bank of India to make export credit cheaper. He was speaking at an interactive meeting with leading exporters, organized by the Federation of Indian Exports Organizations, FIEO.
Mr. Chidambaram said, the government has been responsive to the suggestions made by exporters and has taken several measures to simplify import-export related procedures. He said, the Padmanabhan Committee has studied the issue of export credit in detail but mentioned that putting exports under priority sector might affect some other sectors. Under the priority sector lending Banks lend 40 % of their loans to sectors such as agriculture and small scale industries.
59-60 per dollar is the right level for Rupee
Speaking about the exchange rate of the Rupee, Mr. Chidambaram said the right level of rupee would be between 59 – 60 per US dollar and the currency should not overshoot that level. “But that is not something I am willing to pronounce on” he added.
The Finance Minister said that the global economy is changing. “Things have changed, In the US economy there is clearly an upswing, In Europe too, some countries, particularly UK are showing better growth, China is expected to grow at 7 per cent while even Japan is expected to show an unprecedented 3 per cent growth” he observed. He said the US, Europe, China followed by Japan and South East Asia are important export markets for India. Mr. Chidambaram asked the exporters to competitively push their products in these markets as well as the emerging markets.
Exporters gathered at the interactive session demanded greater government support to push exports. They called for setting up of an Export Development Fund, with contribution from the government as well as the industry to boost export promotion. Exporters also demanded a single window service or a nodal officer system to deal with various central excise, customs and service tax issues.
The Commerce Secretary, Mr. S R Rao and Director General Foreign Trade, Anup Pujari were also present and answered the queries raised by exporters.
Key recommendations of Padmanabhan Committee Report
The Committee has made recommendations relating to i) review of Gold Card Scheme for extension of export credit to exporters, ii) appropriate inclusion of export finance under the Priority Sector Advances for scheduled commercial banks, iii) raising of foreign currency loans on pool basis for extension of export credit to exporters, iv) allowing factoring on non recourse basis, v) liberalization of merchanting trade, vi) financing to units in Domestic Tariff Area (DTA) / Special Economic Zone (SEZ), vii) more incentives in the area of taxation benefits and subvention, viii) denomination of export credit limit in foreign currency, ix) simplification of hedging procedure, etc.