Exporters were expecting interest rate cuts on post and pre-shipment credit. But there is nothing for them.
Though RBI has said credit is available at Libor-plus 0.75 per cent, exporters are not getting it from most banks. The scheme is only a partial starter.
RBI also said transaction costs will be reduced but in reality nothing not been done. There are various unwanted charges that exporters have to pay, including stamp duty, while seeking export credit limit increase.
All these need to be removed if we have to compete with China. Export trading house have the freedom to trade with any country.
Buy for Japan, sell in Germany, buy in Germany sell in Hong Kong but receivables have to come back in six months.
It was expected that for status holders, merchandise third country trade realisation of foreign exchange will be increased to 365 days but it has not been done.
Banks are shy to lend money to exporters despite India having reserves of $92 billion. But nothing seems to have been done to make more credit available to exporters.
India is a small international player with exports of $50 billion, even smaller countries such as Thailand have more exports. Without adequate credit there is no way to increase exports.
The policy looks good for everyone expect for forex earners. There must be a distinction between those who earn foreign exchange and those who spend.
