FIEO Hails 2% interest subvention

News from The New Indian Express, ENS Economic Bureau 12 Oct 2011

           NEW DELHI: Ramu S Deora, President, FIEO has welcomed the announcement made by RBI of extending Interest Subvention from 1 April, 2011 to handicrafts, handlooms, carpet and Small and Medium Enterprises (SMEs) that will partly provide the much needed relief to the export sector. The sector is burdened by interest rates which have jumped from 7 per cent to 12.5 per cent in the last 15 months.

         However, the Government needs to extend interest subvention to at least all labour intensive sectors like gems and jewellery, apparel, engineering, agro and marine sector etc., he said.

         The cost of export credit even after factoring 2 per cent interest subvention will range between 10-11 per cent, which is much above the rate at which credit is made available to our competitors, added the FIEO chief

        Deora asked the Government to expeditiously include the left over high employment intensive sectors and also increase the subvention from 2mper cent to 3 per cent.

          Earlier, Deora also called for managing exchange fluctuations, providing refund ofbasic customs duty through CENVAT and separate Credit rating norms for exporters at the Board of Trade meet with Commerce Minister Anand Sharma. He raised the issue of high volatility in the exchange rate which is not going to significantly benefit exports as it is expected to be short lived. Most exporters have, anyway, hedged their exports at Rs.45-46 to a dollar.

       Exporters are anxious that the depreciation will make imports costlier, fuel inflation, and also swell the trade deficit. Deora sought RBI’s intervention to counter the sharp fluctuations in exchange rate.

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