The Reserve Bank and the government need to ensure timely and affordable bank credit for exporters to boost outbound shipments, EEPC India said on Thursday.
Engineering Exports Promotion Council (EEPC) said there was a sharp annualised drop of over 54 percent in the gross bank credit deployment in the export sector.
“Against a gross credit deployment of Rs 434 billion (Rs 43,400 crore) till October-end 2017, the figure dropped 54.6 percent year-on-year to Rs 197 billion (Rs 19,700 crore) in 2018,” the council said in a statement.
EEPC India Chairman Ravi Sehgal said while several global factors such as trade war between the US and China and uncertainties over Brexit are hitting the export demand, the cost of credit remains a big concern for exporters.
“Subdued flow of credit is also seen in the engineering segment as well, as per RBI data. Credit is the lifeline of the industry and exporters and the situation need to be addressed sooner than later,” he added.
Besides, exporters are facing many problems in the wake of RBI’s instructions to banks to not to honour shipping bills older than two years under the Export Data Processing and Monitoring System, he said.
“Ironically, these irritants are surfacing at a time when the going is difficult in the global market due to trade tensions between the US and China and other issues,” Sehgal said.
The sector contributes about 26 percent to the country’s total merchandise exports.
Engineering exports were USD 76 billion in 2017-18 and are expected to touch USD 80 billion this fiscal.
During April-October 2018-19, these exports stood at USD 48 billion as against USD 43.11 billion in the same period previous fiscal.
Shipments to the US and Europe account for about 40 percent of the total exports from the sector.