Export sector needs a fund like RIDF: FIEO

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SME Times News Bureau | 03 Apr, 2014
Apex exporters body, Federation of Indian Export Organizations (FIEO) has said that scheme akin to Rural Infrastructure Development Fund (RIDF) be put in place for exports for allocation of funds while bringing it under priority sector lending.

"Putting exports in priority sector window; ensuring that they get 12 percent of the banks lendable funds as stipulated by the RBI as against the existing 3.96 percent needs to be monitored. A corpus of unutilized funds as is being put aside in the form of RIDF for agriculture needs to put in place for exports," President, FIEO, M Rafeeque Ahmed said in a statement to promote access to bank funds for the export sector similar to that which exists for the agriculture sector.

Ahmed said that to bring back GDP levels from the existing decade lows, studies indicate capital requirements may exceed USD 7-8 trillion and may need to look abroad for USD 3-4 trillion of its capital needs from 2014-20 or an annual average of USD 500-700 billion for which an enabling investment and supportive export regime may be a pre-requisite.

While commenting on RBI's monetary policy stance, he stated that while a 'status quo' was as anticipated, the last weekly update of RBI ending 28th march 2014 shows a decline in credit-offtake to 14.7 percent from 15.4 percent in the corresponding period last year besides a stagnant investment-deposit ratio and a declining incremental investment.

Expressing concern at the state of the external sector, FIEO Chief said that while merchandise exports fell (by 3.7 percent Y-o-Y) in February after growing for the past 7 months, non-oil imports witnessed a record contraction of 24.5 percent Y-o-Y.

"Further the volatility of the rupee rising to a eight-month high against the dollar due to investors purchasing stocks and bonds by USD 3.5 billion this month led to a dollar buying spree in turn releasing rupees into the market adding to further inflationary pressure," he added.