'Fix export credit for SMEs to achieve $750 bn target by 2018-19'

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Saurabh Gupta | 21 Aug, 2014
Apex exporters body Federation of Indian Export Organizations (FIEO) has set an ambitious export targets of USD 350 billion for the current fiscal and USD 750 billion by 2018-19 and in order to achieve the desired export target, FIEO Chief Thursday said that the government should fix certain percentage of credit for small and medium enterprise (SME) exporters so that factors affecting such projections can be corrected and long term vision for exports is maintained.

"Looking at the declining trend of flow of credit to export sector, we request the government and the RBI that the credit flow to exports should be maintained. Today the credit flow to export sector is very slow so many of our SME exporters are suffering from lack of credit from banks. We have to have a percentage fixed that compulsorily every bank has to give export credit to the certain percentage, which we have been asking the RBI for a long," FIEO President, M Rafeeque Ahmed told media at press conference in New Delhi on Thursday.

He said, "We request the government and the RBI to bring exports under the Priority Sector Landing. The cost of credit should be reduced by immediately restoring interest subvention of 3 percent from 1st of April, 2014." He said, "The delay has created liquidity problem for the export sector besides, uncertainty."

Ahmed also said that the marketing support for exports particularly for SME sector could hardly be undermined. "We reiterate our request to create an Export Development Fund for sustain marketing during 2014-19 with a target of USD 750 billion exports," said Ahmed.

Indian exports clocked a CAGR of 17.2 percent in last 10 years. However, the Compound Annual Growth Rate (CAGR) has come down to 11.01 percent in last five years. The decline in CAGR is primary on account of the fact that India witnessed negative growth in 2 out of last 5 years and only 4 percent growth in one year.

Moreover, the global trade was also subdued in last 5 years. The world trade declined by 12.5 percent in 2009 jumped to increase by 13.9 percent in 2010 followed by modest growth of 5.4 percent in 2011. In 2012 and 2013, the world trade only grew by 2.3 percent and 2.1 percent respectively.

However, the global trade is expected to increase by 4.7 percent in 2014 and 5.3 percent in 2015. The regional forecast is also much better for the next few years with both US and EU posting better economic results, said FIEO.

Based on the above factors, FIEO might look at an export target of USD 750 billion by 2018-19. "This would require a CAGR of 19.14 percent during 2014--19," Ahmed said.

"New sectors like service, project exports, e-commerce, defense and Aero space should be adequately supported and facilitated in the new Foreign Trade Policy (FTP)," he added.

When asked, FIEO chief stated that the new Foreign Trade Policy by the new government is expected to be announced in next 2-3 weeks.