The government is set to strengthen Exim Bank of India and Export Credit Guarantee Corporation as part of a venture to make dollar-credit available to Indian exporters and help reduce the cost of funding and provide them with a natural hedge for overseas earnings.
The plan came into action as the government realised that it was important to push exports through other means and identified inadequate credit flow to exporters as one of the key areas that needed to be tackled. A strategy was prepared following a meeting between commerce and industry minister Suresh Prabhu and officiating finance minister Piyush Goyal a few days ago.
Data shows that foreign currency export credit has been in the Rs 2,300-2,400 crore range since 2013-14. As a percentage of exports, export credit has hovered around 12.5% mark for the last five years. For a long time, exporters have been complaining about the lack of adequate funding, especially at reasonable costs and the government is now trying to address the concern.
The flow of foreign currency export credit could help exporters access funds at around 6 per cent, compared to double-digit rates that they often pay to Indian banks, which lack capacity and expertise, sources told TOI.