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Exporters want benefits for exports settled in rupee, hike collateral-free credit limit

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NEW DELHI : Exporters have approached the Centre seeking benefits for exports made through the rupee trade window provided by the Reserve Bank of India. (RBI).

In this context, it is important to mention that exports to Iran in Indian rupee got such support. Amid the drop in exports, they also want a 25 per cent increase in collateral-free credit limit for raw material and freight payments.Last month, the Reserve Bank of India (RBI) announced the settlement of export and imports in the Indian currency, a move aimed at easing trade with Moscow and Tehran under multiple Western curbs that are nearly cut off from standard cross-border payment platforms.

Apex exporters’ body Federation of Indian Export Organisations (FIEO) as saying, “The transaction in Indian rupee may be considered as good as free foreign exchange for export purposes.” Further, it asked for a revisit of Russia’s export credit guarantee policy.Additionally, it sought a 25 per cent increase in the collateral-free credit limit for payments of freight and raw material, as well as the return of the higher subsidy that the government offers to meet their need for cheap funds. Worth mentioning here is that the exporters’ body has sought government intervention at a time when India’s exports fell after 16 months — by 0. 76 per cent — on year to $35. 24 billion in July and shrank 12. 18 per cent from June.It said the feedback on global trade signals to a likely economic downturn in exports in the next two quarters as global inventories are pretty high.

More importantly, India’s merchandise exports are grappling with many challenges such as shift in consumption from goods to services with businesses operating unhampered after the pandemic, global inflation that is lowering the purchasing power and many advanced economies are in recession. The low value products may not face much issue in getting orders, but the prices of most metals and commodities are declining, which may impact the value-wise export realisation also.“ Since countries are facing a demand squeeze, the payments (they make to Indian exporters) are likely to be delayed,” the financial daily quoted FIEO as saying.

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