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    More export sectors to get cheaper credit

    Synopsis

    "The commerce secretary has already talked to the secretary of department of financial services on extending the interest subvention scheme to more sectors," a senior commerce department official told ET.

    NEW DELHI: More export sectors may soon get access to cheaper credit, with the commerce department planning to expand the list of beneficiaries under the interest subvention scheme as a measure to boost sagging exports.

    "The commerce secretary has already talked to the secretary of department of financial services on extending the interest subvention scheme to more sectors," a senior commerce department official told ET.

    Under the scheme, re-introduced in June this year, PSBs offer loans at 2% discount to exporters of toys, sports goods, processed agricultural products, ready-made garments, handicrafts, handloom, and micro, SMEs.

    "The commerce minister may also meet the finance minister to take up the issue of availability of cheap and adequate credit to exporters," the official said.

    The move to extend this scheme to more sectors follows the commerce minister's meeting with export promotion councils and leading exporters earlier this month to discuss ways to stem the fall in export growth. Exports shrank 5.06% in the first four months of the current fiscal.

    Leading export organisations such as Ficci, CII and Fieo say lowering interest rates can revive exports; but the Reserve Bank has, so far, refrained from doing so because of worries over inflation. With demand shrinking in the West, especially in the European Union, exporters say lower cost of credit is vital for competitiveness.

    "In a situation where all exporters, irrespective of their size, are getting hit by the slowdown in the global economy, the government should not pick and choose. It has to expand coverage of the interest subvention scheme to cover all exporters," said Sanjay Budhia from the Confederation of Indian Industry. Export organisation Fieo said rate of subvention should be about 5% for it to make a substantial difference to exporters.

    However, officials said it is not possible to extend the benefit to all sectors or increase the subvention significantly. "We cannot make a demand that all exporters should be given subvention as the financial implications would be huge," the official quoted earlier said.

    While it is not difficult to get banks to implement the interest subvention scheme, making a larger quantum of credit available to exporters is a bigger problem, the official added.
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