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As exports dip relief must come from the budget
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Bikky Khosla | 02 Jun, 2009
Hectic parlays for this year's budget have begun and industry sectors have started giving their valuable recommendations. Considering the current economic situation, I really hope the budget will find some place for the SME sector in general and the SME exporters in particular.
First and foremost, the earlier tax benefit for exports under Section 80HHC if revived can bring some relief to the exporters. Not to forget the continuance of the tax holidays for 100 percent EOUs and raising the interest rate subvention for exports from 2 to 3 percent.
Again when I see at the sector, I feel funds need to come in for technology adaptation and IT usage which can help the sector to tide over the current crisis.
SMEs today are facing severe liquidity crunch, thus affecting their expansion plans, which is very important to fuel growth. A concrete policy to answer this problem is long overdue and would be surely welcome if it figures in this year's budget.
The second hurdle that SMEs face is marketing support for exports. Without mincing too many words I can conclude that the support given under Marketing Development Assistance is highly inadequate. For promoting over USD 175 billion exports, the total allocation for market assistance is less than INR 1 billion. I hope the amount of assistance is increased substantially in the budget.
For years now, SMEs are facing stiff competition from several nations who are eating into not only their global but also their domestic market share. Finance Minister, Pranab Mukherjee and his team can consider taking certain steps like excise duties reduction for the sector and import duties hike in foreign goods which are giving undue competition to the already battered sector's manufacturing.
If these find place in the Budget in July, it will definitely be a good beginning. Meanwhile the current fiscal has started on a sour note with exports down 33.2 percent at $10.74 billion in April against $16.08 billion in the same month of the previous fiscal. Let's just hope that the budget gives us at least some reasons to smile.
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Interest rates
ashwin bahl | Wed Jun 3 06:10:25 2009
Hei Bikky,
You are doing a very good job highlighting the problems of SME's with regards to finance.
Pls allow me to share our story, we are a small exporter with local retailing in ethnic garments, some leather products etc, we have OD facility from PNB for over a decade, always been a excellent customer, we pay 11.5% on one a/c against
collateral of our shop and 13.25% against our LIC policies.
Now these rates are after the so called interest reductions announced proudly by the Government. Now tell me with these interest rates and our margins, can we really compete and get export orders ?
No way, we are doomed literally and as good as winding up the biz.And mind yu our limits of borrowing has been hardly much at any given time, average 4 lakhs.
When India needed foreign exchange many of the SME helped in this task, and I am afraid to say all the policies do not favor any incentives whatsoever. We can not expect anything to change, yes we will see the down word spiral of exportseven further, the big ones will survive and then you can expect more and more people out of jobs esp in our Textile industry. The Babus/Ministers have to come down to the floor and see what we are facing, just big talk in the media or the Parliament does not help.
Regards
Ashwin Bahl
Mumbai
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Re: Interest rates
Vinay Joshi | Wed Jun 10 18:17:56 2009
With Rupees four lacs borrowing, you are creeping, but not informed ratio of exports. You are not a manufacturer exporter, wide avenue open for export.
You should bargain, YES BARGAIN with your bank or tell them we shift our a/c.!
It seems you are not knowledgable about banking finance, JUST BUDGE in Reginoal Managers office, tell, you want without collateral an amt upto Rs.18.75 lacs for expansion of biz.
As a micro enterprise you can transform to medium, not small.
Further, only if you can avail pre/post shipment export credit, financial charges can be in accordance.
India doesn't require any foreign exchange,old view put it aside. MoF/RBI has problem of plenty!
You can even try merchandising export, third party shipment, from an other country. What is preventing you?
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Re: Interest rates
kc gaur | Wed Jul 29 11:50:43 2009
According to politicians,it is not the duty of govt to make exporters rich, yes, it is their first duty to make rich scheduled castes and backward class officers and politicians richer by providing every facility on earth.
All the export houses should be provided loan on export invoice value at special interest rate, say, at existing int'l rate, competitive countries' rate.
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Regarding price of US Dollars Going down
Sumit Singla | Wed Jun 3 06:04:45 2009
It is also important to give relief to this sector because the price of dollars is going down and when we get its realization in Indian Rupees it value get very low so there is one more reason to give some incentive to this sector.
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Re: Regarding price of US Dollars Going down
Vinay Joshi | Wed Jun 10 18:41:33 2009
What do you mean by price of US$ going down? Absurd!
You can fetch more INR vis-a-vis $ than earlier year. If at all you are an exporter, your query sadly wrong.
The mean rate of Forex Dept, conversion, transfering funds to Branch a/c with relevant charges deductions are to be considered.
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| Customs Exchange Rates |
| Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
| Japanese
Yen |
58.85 |
56.85 |
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