Federation of Indian Export Organisations (FIEO) has said that to overcome the current slowdown in merchandise exports the focus should be on providing liquidity at competitive cost to the export sector.
RBI may consider opening export credit refinance facility to banks so as to encourage them to lend to the export sector with refinancing from RBI at the Repo Rate, said the apex trade promotion organisation.
India’s merchandise exports in October declined to USD 29.78 billion compared to USD 35.73 billion in the same month last year, as per the official data released on Tuesday.
According to FIEO, President, Dr A Sakthivel the dip is a reflection of toughening global trade conditions facing demand slowdown on account of high inventories, rising inflation, economies entering recession, high volatility in currencies and geopolitical tensions.
He further said that the government should look into the request of the export sector for continuing with IGST exemption on freight on exports, which lapsed on September 30, 2022, particularly as the freight rates are still at much elevated level and GST on such freight will affect the liquidity of the exporters, though refundable later.
Further, the Federation is also of the view that the new TMA scheme for agri exporters may be announced as the cost of freight, particularly the reefer, is very high. Besides, time-bound clearance to all SCOMET related shipments and encouragement to investment in export marketing through tax deductions is also the need of the hour.
“The drop in commodity prices and restriction on some exports, with a view to stem the price increase in the domestic market, have also affected the growth numbers,” said the chief.
He said that the decline in exports of major labour-intensive sectors including engineering goods, apparels and textiles, gems & jewellery, petroleum product, organic & inorganic chemicals, drugs & pharmaceuticals, marine products, leather & leather products besides many agri product sectors is of particular concern as these sectors are key to huge employment generation.
At the same time, the growth in exports of electronic goods on a sustained basis is a good sign besides growth in exports of few agri product sectors including oil seeds, oil meals, tobacco, tea and rice, said FIEO. However, the decline in imports is encouraging despite the jump in import of petroleum, crude & products, fertiliser, crude & manufactured and transport equipment. We hope that the energy prices will come down further to provide more relief to us on the trade deficit, opined FIEO Chief.
