FIEO chief calls for export-friendly policy milieu

The Federation of Indian Export Organisations (FIEO) is worried about rising inflation and the concomitant spurt in input costs.

The persistent uptrend in policy rates by the apex bank along with inflation would impact production costs to the detriment of manufacturer-exporters of the country.

Talking to

Business Line informally, the FIEO President, Mr Ramu S. Deora, voiced serious concern over the fall in value-added manufactured exports which is further compounded by decline in credit flow to the manufacturing segment with export credit constituting a meagre 5.6 per cent of total priority sector lending prescribed to the commercial banks.

He said despite the continuing high transaction cost and unstable milieu over some of the popular export promotion schemes including the Duty Entitlement Passbook (DEPB) scheme, which is expiring by end-June, the exporting community acquitted itself well by notching up $246 billion in fiscal 2010-11.

The export performance in 2010-11 has proved that India's diversification strategy paid off with Asia, Latin American countries and Africa emerging as the key markets, he said.

The signing of a spate of free trade agreements and comprehensive economic cooperation agreements with Asian countries in recent times will also push Asia's share in India's exports to 55 per cent by 2014, the FIEO chief said.

He said apart from the traditional sectors, India's phenomenal export growth was powered by engineering, chemicals, including pharma and gems and jewellery.

Mr Deora said the concerns plaguing the exporters today include the escalating cost of credit as well as infrastructural bottlenecks, which might impact exports adversely in the next couple of years.

However, a silver lining on the infrastructure domain, he said, pertained to the India-US Technology Trade Agreement which proposes to improve logistics infrastructure and services in India.

Stating that with the end of the interest subvention scheme the cost of credit has risen from 7 per cent to somewhere between 10.5 and 11 per cent, Mr Deora said the four percentage point hike in interest cost would be too big to be absorbed by small and medium exporters (SMEs).

He further deplored the delay in the refund of 4 per cent additional customs duty and other drawback payments due to exporters.

Unless the gap between the intention of the Commerce Ministry in helping exporters and the implementation of the various key export promotion schemes by the Revenue Department is bridged, the continued squeeze on the exporters' margins would make them hesitant to explore new areas and markets, he added.