The government is looking at ways to improve the competitiveness of exports amid mounting geopolitical tensions and has begun examining the export credit landscape. The commerce and industry ministry has sought details on exporters’ financial needs, challenges faced in accessing export credit and the ways to improve it. India gives pre- and post-shipment export credit to enable exporters to access financial resources that are crucial for facilitating international trade.
“The exercise aims to look at effective interventions as many exporters encounter difficulties in utilising these export credit facilities,” said an official.
The ministry has sought details on specific bottlenecks in the existing export credit mechanisms that need to be addressed and the best practices from other countries that could be adapted to improve the export credit landscape in India.
“There is almost a 5% difference between the cost of export credit in India and countries like China, Vietnam and South Korea, which impacts the competitiveness of our exports,” said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO).
The exercise assumes significance as India’s goods exports in FY24 fell 3.11% to $437.06 billion from $451.07 billion in the previous fiscal. Exporters expect a demand slowdown due to global uncertainty and hence need funds for a longer period. Officials said specific intentions could be looked at to improve the access to export credit once the exercise is over.
Export credit includes priority sector lending and interest subvention scheme, which allows exporters of 410 products and all MSME exporters to get bank credit at a subsidised rate of 2-3%.
Seeking an extension of the interest subvention scheme, FIEO president Ashwani Kumar said the scheme is relevant more today as buyers are asking for longer period of credit with a slowdown in demand and offtake from the shelves, whereas exporters are also looking for larger credit due to huge hike in sea and air freight.