FIEO appeals FM to increase post shipment credit period

Mumbai, Nov 6 (UNI) The Federation of Indian Exporters Organisation (FIEO), western region president G K Gupta, today urged the Union Finance Minister P Chidambaram that post shipment credit, presently available only up to 90 days, should be provided for a tenure of 270-365 days, keeping in view of the financial crunch faced by overseas buyers.

Speaking to mediapersons here, after submitting a pre budget-memorandum to the governmen, Mr Gupta said ''The rate of export credit in the Indian rupee should be linked with bank rate instead of benchmark prime lending rate. Such export credit should be made available at bank rate +100 basis points. Pre-shipment and post shippment credits in foreign currency should be made available to exporters at LIBOR + 100 basis points as stipulated by the Reserve Bank of India(RBI).

RBI should issue directives to banks to provide such credits to exporters. With the risk of default by buyers going up, banks will be reluctant to give credits without adequate insurance. Insurance companies should be incentivized to keep supporting exporters. The government may in turn, stand as a guarantor for exporters receiving orders from abroad so as to encourage banks to provide credit to such genuine exporters.'' Mr Gupta said ''A guarantee by bank will provide necessary cushion and support to provide loan to such deserving exporters. Indian Banks should be encouraged to confirm Letter of Credit (LC) received from overseas and the government guarantee may provide necessary buffer in case of default, which will be few and far between. The government should ensure to provide all export benefits to exporter in a time bound manner to tide over the present crises. The issue of delay in grant of Drawback at various ports should be expediated. In view of difficult financial situation, the Government should delink grant of export benefit subsequent to realization of export proceeds, as buyers will now seek longer tenure of credit and linking of the export benefit with realization will delay grant of such benefits.

UNI AR LY VKG1620