Exporters may get sops after Gujarat elections: FIEO

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Saurabh Gupta | 17 Dec, 2012
Apex exporters' body FIEO has expressed hope that the government may announce some sops after election in Gujarat, where polling is underway for the second and final phase of elections, which will come to an end today.

"We hope that the government will announce this in coming days, may be after Gujarat elections. The government may extend interest subvention to the engineering, gems & jewellery and leather sectors to boost sagging exports," FIEO, President, Rafeeque Ahmed told SME Times on the sidelines of a press conference in New Delhi recently.

However, Commerce Secretary S R Rao, while interacting with media persons recently, had said that the Centre would come out with some export sops "within a couple of days" in a bid to reverse the trend of declining exports in the past few months.

"The share of credit going to exporters has gone down from 4.3 percent of the overall credit available by the bank in December 2011 it has come down to 3 percent today, which is almost 25 percent cut on the credit given to the exporters. That is effected our exports," Ahmed said.

Exporters pay anything between 11.5 percent to 13.5 percent as interest on credit. The export subvention scheme, which provides a 2 percent discount to exporters of identified sectors, gives some relief to exporters.

FIEO also urged the government, along with the RBI, to give instructions to the bankers that banks could not decline their credits to exporters. There must be a percentage should be maintain on the overall credit.

The foreign trade policy announced in June this year extended the scheme to sectors including toys, sports goods, processed agricultural products and ready-made garment, apart from SMEs and the handloom sectors, reports media.

The contraction in global trade and slowdown in domestic manufacturing has affected country's exports which touched USD 189.22 billion during April-November, showing a negative growth of 5.95 percent.

Imports also showed the similar trend falling to USD 318 billion with a decline of 1.58 percent over the April-November, 2011. However, rising trade deficit which increased to USD 129.50 billion during April-November, as compared to USD 122.63 billion in the corresponding period in 2011 is a cause of serious concern.

FIEO Chief also dismiss any possibility of achieving the set target of USD 360 billion for 2012-13. He said, "Going by the present trend, we may end up with exports between USD 300 - 320 billion in the current fiscal."

"The present indication points to a difficult 2013 as uncertainties are looming large on the European Union, which will have its bearing on every country. The world trade forecast for 2013 is definitely better than 2012 but still the same is not very encouraging."

"The long term strategy for promoting exports would be to support export of high technology items, branded products and moving up the value chain in respect of all product categories, observed Ahmed.

On volatility in Rupee, he said, "It will continue on account of rising trade deficit and erratic inflows. Rupee will strengthen only if we see massive inflow through FDI route. FIIs have already invested USD 19 billion in the current year without taking heat out of rupee. This year, FIIs inflow was second highest in last 14 years. The reforms undertaken by the Government, if they continue with the same speed, it could only strengthen rupee otherwise the volatility faced by us in 2012 will continue in 2013."

"To restrict the decline in exports, we (FIEO) feel that the government should intervene to see the decline should be arrested and we should go to the positive export figure," he added.