India is trying to strengthen its exports by increasing its strategic partnerships with many countries, but in the last few decades, the export figures have been on the decline in other decades. Due to the unstable situation of the country’s banks and the global supply chain affected by the ongoing war in many parts of the world, this goal of the government has been adversely affected.
In the last two years, there has been a 5 per cent decline in the profits received by exporters. This decline is in complete contrast to the changes in other sectors of the market. This figure is also a cause for concern because this decline has been observed in the major divisions of the export sector, which fell by 41 per cent to Rs 11,721 crore after a profit of Rs 19,861 crore.
Export target of Rs 168 lakh crore by 2030
India has set a target of exports worth Rs 168 lakh crore by 2030, so the need of the hour is to overcome the debt crisis. Due to lack of credit, the Commerce Department has put the banking regulatory body, the Reserve Bank of India (RBI) and the Finance Ministry in the crosshairs.
What are the challenges?
Rising commodity prices and increasing freight rates remain a hurdle to this vision of the government. The Federation of Indian Export Organisations (FIEO) has highlighted these issues as a major obstacle for exporters. In addition, West Asian exporters to the Red Sea are facing increasing pressure due to geopolitical tensions. Due to this, the shipping route is being affected. The situation is becoming more and more dire.
Despite repeated warnings from exporters and the increasing gravity of the situation, the government and the RBI are yet to implement effective measures. The next meeting of the Board of Trade will be held later this week under the chairmanship of Commerce and Industry Minister Piyush Goyal. Hopefully, this issue will be reconsidered.
The bank is extending a helping hand
Many banks have complicated their policies, resulting in exporters facing difficulties in monetary transactions. To address these challenges, FIEO has offered additional support from the Export Credit Guarantee Corporation (ECGC) as well as an increase in interest subsidy.
FIEO has suggested that the RBI consider setting a sub-target for export credit within the existing target of 40% for providing credit to the priority sector, FIEO Director General Ajay Sahay said, The Times of India reported. According to Sahay, the move could help mitigate some of the credit flow issues faced by exporters.
