Give part of forex reserve to Exim Bank: Commerce Min to RBI

To boost exports, the Commerce Ministry wants RBI to give part of the foreign exchange reserve to the Exim bank on favourable terms.
In a communication to the RBI, the ministry has said that the central bank has substantial foreign exchange resources and certain amount should be made available to the Exim (Export-Import) Bank, as they support exports.
"The move would help in reducing overall cost of funds for exporters, which presently get credit at higher rates. If the cost is reduced to some extent for the exporters, it will help them and make their products competitive in the global markets," a top official said, while adding that RBI can lend to the Exim Bank on long-term basis.

The issue has been discussed at the Finance Minister level also.
Cost of capital is a big imperative in determining the competitiveness of goods in the international market.
The move assumes significance as exports are in negative zone since December 2014.

Falling for the 15th month in a row, exports dipped 5.66 per cent in February to USD 20.73 billion.
For April-February 2016, cumulative exports declined by 16.73 per cent to USD 238.41 billion, as against USD 286.3 billion in April-February period of 2014-15.
IndiaRatings and Research, a Fitch group company, in a new report said that India's exports will remain under pressure even in 2016-17 as GDP growth across the globe is still uneven and fragile and global trade volumes are low.

"What could pose a challenge here on is that, with most EMs (emerging markets) and China likely to expand their market reach, the struggle to maintain export share as also to bring about their recovery will be a time consuming affair and contingent on global growth trajectory," the report said.
Competition in areas where Indian exports enjoy relative competency may increase.
"With global outlook subdued, the recovery of Indian exports is likely to be protracted," it said adding the governments focus on infrastructure investment is likely to enhance India's export competitiveness compared to its peers.
It said India majorly exports intermediate goods, thus moving up the value chain could be an alternative.

"...The introduction of Goods and Services Tax is yet another policy measure that seeks to rationalise existing tax structures and harmonise costs for major firms, domestically," it said adding export performance is likely to stay weak in 2016-17 as globally economies face headwinds to their grow th prospects.
"While the rupee can act as an enabler for export revival, it is unlikely to be a weaken and trade at an average of 67.5/USD," it added.