Challenges for exports identified but left unaddressed: FIEO

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SME Times News Bureau | 18 Apr, 2012
Exporters' body FIEO Tuesday expressed dissatisfaction over the Centre's inaction in finding remedies even as several global challenges for the sector have been identified by the Reserve Bank of India.

"While RBI recognises global challenges with modest recovery in US, sovereign debt problem looming over Euro zone and declining growth in emerging and developing economies, no significant step was taken to give a fillip to exports," said FIEO President M Rafeeque Ahmed in a press statement.

He urged the government to extend a helping hand to the country's export sector by taking a slew of measures, such as augmenting availability of PCFC for MSME exporters, extending interest subvention for Rupee Credit, increasing share of export credit in the net bank credit, rationalising increasing banking charges, etc.

Ahmed demanded Commerce,Industry and Textile Minister Anand Sharma to restore interest subvention for exports immediately with effect from April 1, 2012.

While the National Manufacturing Policy aims at bringing the manufacturing sector's contribution to GDP 25% as against 10-12% in the last decade and so, it is unlikely that the Indian industry, with working capital loan available at rates as high as 16-17%, will be able to afford enough expansion and modernisation of production facility to help the sector reach that goal, the FIEO chief viewed.

Commenting on the RBI's policy rate cuts in its annual credit policy unveiled on Tuesday, the Ahmed viewed that the apex bank could have attempted more steep cut to boost manufacturing and demand.

"This was anticipated with GDP shrinking to 6.1% (in October-December, 2011), IIP to 4.1% and an increasing CAD/trade deficit," he said, pointing out that the thirteen policy rate hikes by the central bank in the last 2 years have taken the rates from 4.75% in March 2010 to 8.5% while maintaining a status quo in the last 3 reviews had adversely impacted growth.